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Can I get better rewards without opening a new card?


If you’re looking to up your rewards intake but don’t want to open a new card, you may be out of luck unless your bank will work out a deal

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QuestionDear Cashing In,
I want a credit card that rewards me for spending with some type of miles, cash back or something, but I really don’t want or think I need a third credit card. The two credit cards I’ve had for about 10 years, Capital One and Citibank Diamond Preferred, are in good standing, but don’t reward me for my spending. I would hate to close one of these credit cards to open up a rewards card and have it make a negative impact on my credit or give up such a high credit limit for a new card with a significantly lower credit limit. So, what are my options in this situation? – Ronnie

AnswerDear Ronnie,
You seem to have a few contradictory impulses here: You don’t want a third card and don’t want to close an existing card, yet you would like a card that gives you rewards of miles or cash back.

I understand each approach, but they are fundamentally different approaches. Let’s look at your available options:

Option 1: Keep existing cards. In some ways, you are a bank’s dream customer, because you are loyal and are not regularly switching cards. In addition, you say the cards you have are not rewarding you for your spending. That’s certainly true for the Citi Diamond Preferred card, but I’m not sure what kind of Capital One card you have. There are Capital One cards with and without rewards.

Although the cards have (presumably) no annual fees, banks make money from interchange fees that are charged to merchants every time you use your cards. And they are not paying you any rewards for that.

Assuming you pay in full and on time, and manage other forms of credit well, your credit rating should be high. That can be an important asset, and you are right to want to protect that. But this approach shuts you out of any rewards.

Option 2: Apply for a third card. This would give you the ability to start earning rewards with your spending, while maintaining the credit advantages of holding onto two cards with extensive credit histories.

Because your first two cards most likely have no annual fees, you could hang onto them and keep them active by making a small charge on each every month and pay it off.

As far as your credit goes, you would have a very slight, temporary reduction in applying for an additional card, but that would likely disappear within a few months, assuming you manage your credit wisely. With an additional credit line, you are also more likely to use a lower percentage of your overall credit (credit utilization), if you carry balances, which helps.

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Option 3: Replace existing card with new card. This is similar to Option 2, but you would be ditching one of your old cards. To me, there is not much of an upside to doing this compared with Option 2, because you would be eliminating an account with a long credit history and a credit line.

One way to do this, though, would be to call Citi and Capital One and tell them you’d like a different card. They might be able to switch your existing account onto a different card without pulling your credit. For instance, if you have a Capital One card that doesn’t earn rewards, you might ask if the bank can switch it to a Capital One Quicksilver card, which has no annual fee but that earns 1.5 percent back on every purchase. Depending on the circumstance, Capital One might count that as an application for a new card, but it might not. Citi and Capital One both have plenty of reward cards, with and without annual fees, which might interest you.

That might be the best solution, given your preference to keep two cards yet earn rewards. Otherwise, I favor Option 2 – getting a third card for rewards while hanging onto your original cards to help your credit and to be there in case of emergencies.

See related: Cash back cards become more generous with rewards, Reward possibilities soar with Starwood-Marriott merger



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