Call it card regret: You applied for a credit card, got approved and, soon after, realized it was the wrong choice.
Even if your regret is immediate, there’s no turning back the clock – you’re stuck with the credit inquiry. So we asked a couple experts how to make the most of your situation. And no, the answer isn’t always “cancel the card.”
Reasons for card regret
Why would someone end up with a buyer’s remorse over a piece of plastic? We’ve seen many reasons pop up in our forum over the years, including:
- Not enough research: A sales pitch at the airport convinced you to sign up for an airline card. Then you went online to research your card and found people raving about a card with the same annual fee that lets you transfer points into several frequent flier programs.
- Bad timing: Your new card is now useless, thanks to an abrupt change in circumstances.
“Let’s say I just got the Citi AAdvantage Executive card,” says Jason Steele, credit card expert and contributor at Comparecards.com. “And next week, my boss says I no longer need to travel. I just paid $450 for a card I’m not going to use.”
- Silly mistake: Perhaps you accidentally applied for a similarly-named card. Or you applied for the version of a card with a higher annual fee.
We asked the anonymous blogger behind Chasing the Points if he’d ever made any such mistakes in his many card applications. He has.
“I wasn’t paying enough attention and applied for a general travel rewards credit card instead of an airline credit card,” he says. “I should have known I applied for the wrong card because in the application it didn’t ask for my frequent flier account number.”
What to do with an unwanted card
Whether you cancel or keep an unwanted card, it won’t necessarily destroy your credit. But it’s important to understand your options – and their possible credit consequences.
Option 1 — Go for a product change
A product change involves switching to another card product from the same bank without an additional credit pull. If the card you really want is from the same issuer as the one you don’t, this can be a wise choice, considering credit pulls ding your credit, albeit temporarily.
Not all issuers will allow this, however, and some won’t do it after you’ve spent money on the original card, says the Chasing the Points blogger, who was denied a product change after his card mistake. You might have greater success if you visit a bank branch in person, rather than relying on phone agents.
“The banker can make notes for the underwriter, advising them that the original card was opened inadvertently and this second application is to replace the first card,” he says.
Option 2 — Just keep the card and get the one you want as well
“I tell people don’t worry about it,” Steele says. “Go ahead and get that other card in addition to the [unwanted] one.”
Steele notes that there are advantages to having more lines of credit open. If you have more available credit, it becomes easier to keep your credit utilization low. Plus, if you keep those accounts over the years, they’ll raise your average age of accounts (another factor in credit scores). You don’t have to regularly use the unwanted card – just put it in a safe place, like the literal or figurative sock drawer.
However, this strategy works only if more open credit won’t lead you into debt. It also assumes the unwanted card doesn’t have a prohibitively large annual fee. If the card waives the fee the first year, Steele recommends keeping it open until a few months before the annual fee is due. At that point, he recommends calling the issuer and asking if it can waive the fee. It may do so – or agree to switch you to another product without a fee.
“Issuers want you to be satisfied,” Steele says.
Option 3 — Close the card and get the one you really want
Maybe too much open credit will tempt you into debt, or you just don’t like the mental and physical clutter of a sock drawer full of unneeded cards.
Or perhaps the card charges a hefty annual fee on the first statement. “That’s the rare case, where I’d say go ahead and cancel,” Steele says, noting that issuers will generally refund the fee if you cancel a card before a deadline (often 60 days after approval).
If an annual fee isn’t the issue, consider waiting until after you’ve been approved for the new card before you cancel the unwanted one – especially if you have a thin credit history. That way, if you’re rejected for the new card, you can build credit with the old one.
How to avoid card regret in the first place
“Newbies need to plan what they want from the card and what they’ll use it for,” says the Chasing the Points blogger. If you travel and dine out a lot, for example, you might pick a card that rewards you for those things.
Other things to research before hitting “apply” include:
- The terms: “You want to be familiar with all the terms and conditions so nothing surprises you,” Steele says. “You don’t want to end up going, ‘Oh I didn’t realize this had an annual fee. ‘”
- The benefits: Rewards, no matter how great, are worthless if you can’t use them. If a travel rewards card seems enticing, first consider whether you travel enough to make it worthwhile.
- The offer: The same card can have multiple sign-up bonuses (including bonus points or promotional financing). Check your mailbox, look for limited-time offers online, or use a tool that soft-pulls your credit (meaning no credit damage) and shows you what you’re qualified for.
“Even if you’re sure it’s the right card, you want to make sure it’s the right offer,” Steele says. “You wouldn’t want to apply for a 25,000-point offer if there’s a 50,000-point offer available.”
If you overlooked the best offer, you may be able to convince the issuer to apply it to the card you just got, Steele says. But success is not guaranteed.
Sometimes, all the research in the world can’t save you from card regret. For example, an issuer might give you an unfairly (in your eyes) low limit or approve you for the card but not the tantalizing sign-up bonus that got you to apply. But, as Steele says, even these setbacks shouldn’t be a huge setback.
“We’re really lucky to have such an extremely competitive market for credit cards,” he says. “If you don’t like it, you can close your card or you can just put it in the sock drawer and use another card. … Vote with your wallet.”