Are you using the wrong credit card?

You may be thinking a credit card is a credit card, so there’s really no difference between two squares of the same plastic. This cannot be farther from the truth.

Credit cards, like anything else in life, have a certain quality to them and your current card may be completely wrong for your lifestyle and financial situation.

As our lives change, our needs change and this is certainly true with credit cards. The low-balance card we may have started out with after high school graduation is not the same type of reward-laden card we crave in adulthood.

Throw any notions of brand loyalty out the window. Staying with the same credit company forever can hinder you from pumping up your credit score.

With that said, keeping an old credit account open will show you have a long history of good credit and can improve your credit score. But before you settle for keeping the same card, consider the mistakes people make when keeping the wrong card.

If your balance is always carried over month after month but your card has a high interest rate, get rid of it. You’ll never pay down the balance with a high APR and it’s not difficult to open a new credit card and have your balance transferred over.

To easily compare credit card interest rates, visit Money Supermarket or other sites that show side-by-side comparisons. You can even compare fees and any rewards, so shop smart.

Although transferring your balance to a lower-rate card is the smart thing in this situation, it can be detrimental if you do it every year. Work on paying your balance down before the 0% introductory APR expires.

If you ran into past financial trouble, such as a bankruptcy and have worked on building up your credit with a prepaid credit card, reassess your credit score every year. Secured credit cards are a smart way to rebuild credit, but once your score starts going back up, they do little to help you.

Once you decide to leave the prepaid card behind, try to aim for a credit score in the 500 or 600 ranges before applying for a major credit card. This way you’ll be approved for good credit.

Another way to determine whether or not you have the wrong credit card is to take notice of annual fees. If you are paying an annual fee but have yet to take advantage of any rewards or perks, this is the wrong card for you.

The majority of credit cards do not offer annual fees, so if you’re not paying the annual fee to take advantage of rewards, get rid of it.

For anyone who is self-employed and uses credit for business-related expenses, a regular credit card is the wrong type to have. Opt for a special business card over a personal card. This makes things easier during tax time.

If you have a travel reward card but never plan on travelling, get a new card. Travel rewards can take years to build up so chances are, you find yourself in a very different place now than you were in when you first applied for the card.

Don’t bother with saving travel points if you won’t use them. Switch to a card that offers rewards you will enjoy, such as cash back.

No matter which type of credit card you choose, use it wisely and manage your debt responsibly.

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