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Dr. Don Taylor, CFA, advice columnistReplacing a credit card that has no rewards

Dear Dr. Don,
I currently hold a credit card that offers no points or rewards. It is the first credit card I ever had, and currently the only one in my name only (I share others with my husband).
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I am interested in dropping my current card for one that offers a better rewards program. However, I'm not sure how to accomplish this without hurting my credit score. I am not interested in keeping this card and opening another, as I already have enough cards to manage! I've thought of three options, but I don't know which is best. They are:


  • Ask my card provider to convert my current card to another in their arsenal that offers points.
  • Close my current card and open another with a different provider.
  • Keep my current card and live without the points option.

I don't carry a balance on any card, so that is a non-issue. Can you offer any advice?
-- Sarah Spoils

Dear Sarah,
I'm always happy to offer some advice. First, start with what you're trying to accomplish with accumulating points, rewards or cash. Airline tickets, college savings, discounts on cars and hotel stays are all possible with rewards cards. A strategy when it comes to managing your spending on your credit cards can help you reach those goals.

If your current card isn't providing the incentives you're looking for then it's time to find one that will. Bankrate has a credit card search feature that will help you find that new credit card.

There's no harm in asking the current card provider what else it has in its arsenal for reward cards and no particular reason to live without a rewards card. That said, I hesitate to recommend that you close the old account.

One of the component parts of your credit score is the length of credit history on your active accounts. Closing your oldest account can hurt your score, especially if the other cards you carry were recently issued. Pull a copy of your credit report and review it with an eye toward the age of the account relationships. A Bankrate feature, "Free credit reports for all," explains how to get a free copy of your credit report.

Even if you decide to close out the account, you should wait until after you've applied for the new credit card. Credit card companies use your credit score to determine the terms of your cardholder agreement and a better credit score means better credit terms.

You've reminded me that I need to go through this process with one of my credit cards. Since I moved to the Northeast I've been flying Southwest and US Airways a lot more than Delta but still carry a Delta SkyMiles card.

To ask a question of Dr. Don, go to the "Ask the Experts" page, and select one of these topics: "Financing a home," "Saving & investing" or "money."'s corrections policy -- Posted: Sept. 18, 2006
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