Purging seldom-used reward cards
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Dear Cashing In,
I have three gasoline credit cards (Shell, ExxonMobil and Sinclair), which all give “cents off per gallon” with no restrictions or caps. Two give 5 cents off, and the other gives 6 cents off. These are cards that can be used only at each company's gas stations. They each have a limit of $1,000. I have had them since 2008 (ExxonMobil) and 2010 (Shell and Sinclair). In truth, I put almost all of the little gas I use (retired) on my American Express Blue Cash Preferred for the 3 percent reward. Should I keep these gas cards and use each one every so often, since I already have them? Or should I get rid of them? I have other cards like Visa and Discover. I would not apply for a gas-only card today, but I already have these three. – Michael
Do you ever have tasks that weigh on your mind for months or maybe even years, until you finally get to them? Like cleaning out a closet, or purging the knickknacks from your attic?
I place this question in the same category as those chores. You have three cards that you don’t use that you are hanging onto – just like some of the clutter that might be in your closet or attic. It’s not doing any harm by staying there, but don’t you feel better when you clean it out?
Really, there is no correct answer. None of those three gas cards you mentioned has an annual fee, so there is no real cost to hanging onto them.
Then again, there isn’t much of a cost to getting rid of them, either. Often, people worry that canceling cards will harm their scores, but those fears are usually overblown. You will be reducing your available credit – ever so slightly. But because it sounds as though you have several other cards, there should be almost no effect on your credit, and any effect would be temporary.
My answer would be different if they were among your only cards, or if they had big credit limits and you carried a balance. If that was your credit profile, then canceling them would negatively affect your credit utilization ratio, hurting your credit. But your cards have small credit limits and you have others, so feel free to cancel the gas cards. They're doing little good for your score.
One advantage of getting rid of them, of course, is that you wouldn’t have to think about them any longer, instead of thinking, “Did I use one this month? When is the bill due? Did I pay it?”
As far as using the American Express card instead of the gas cards, that is probably the right call, too. As of this writing, the average cost of a gallon of gas is $2.12. If you get 6 cents off per gallon, you are saving about 2.8 percent of the cost. If you get 5 cents per gallon back, you save about 2.4 percent of the cost. But the American Express Blue Cash Preferred card gives you 3 percent back on gas purchases.
Now, the American Express card does have a $95 annual fee, while the gas cards have no annual fee. But it sounds as though you spend so little on gas nowadays that it makes little difference.
So really, it’s a toss up. If it were me, I’d err on the side of getting rid of excess items you don’t need, whether they are credit card or junk stashed in your attic or closet.
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