How old is too old for a credit card? If you’re over the age of 21, you might be wondering if you’re too old to get a credit card. Here’s what you need to know.
Checkout this video:
The Pros of Having an Older Credit Card
If you have an older credit card, you may have established a good credit history with the lender. This can work in your favor when you apply for new credit because the lender will see that you have been a good customer in the past. Also, if you have an older credit card with a low interest rate, you may want to keep it even if you get a new card with a higher rate.
It can help build your credit history
If you’re just starting to establish credit, having an older credit card can help because it can lengthen your credit history. A longer credit history is generally better for your credit score than a shorter one.
For example, let’s say you open a new credit card today and then apply for a mortgage five years from now. The lender will pull your credit reports and see that you have only five years of credit history. On the other hand, if you had opened a credit card 10 years ago, the lender would see that you have 10 years of credit history. All else being equal, the lender is likely to view you as less of a risk and give you a better interest rate on your mortgage loan.
You may be eligible for more rewards
If you’ve had a credit card for a while, you may be reaping the rewards in the form of more cash back, points or miles. “Rewards programs change over time, and generally speaking, the longer you’ve been with a card, the more valuable your rewards become,” says Jason Steele, a credit card expert and author of “Budgeting to Zero.”
For example, Chase recently launched what it calls “Ultimate Rewards” for its Sapphire Reserve cardholders. These include benefits like Statement Credits for travel expenses and access to exclusive events. If you had the card when it was first introduced in 2016, you would have received these benefits from day one. But if you applied for the card now, you wouldn’t get them until you spent $450,000 within your account anniversary year –– and even then, they would only last for that year.
You may get a lower interest rate
The average credit card interest rate is currently 19.24%. But, if you have an older credit card, you may have an interest rate that’s much lower than the current average. In fact, the average interest rate for cards issued in the 1980s is just 13.30%. And, the average interest rate for cards issued in the 1970s is even lower at 12.50%.
Of course, your interest rate depends on a number of factors, including your credit score and credit history. But, if you have an older credit card with a lower interest rate, you may be able to save a significant amount of money on interest charges each year.
The Cons of Having an Older Credit Card
If you have a credit card that is more than five years old, it could be time to start considering replacing it. An older credit card will likely have a lower credit limit and fewer perks than a newer card. Additionally, your older card may not be accepted at some merchants. Let’s take a closer look at the cons of having an older credit card.
You may be paying annual fees
If you have an older credit card, you may be paying annual fees. These can add up, especially if you have multiple cards. Annual fees are a charge that the credit card company imposes on cardholders for the privilege of using their card. Sometimes, annual fees are waived if you meet certain criteria, such as making a certain number of purchases or keeping a balance above a certain amount. If you’re not sure whether your card has an annual fee, check your credit card agreement or contact your issuer for more information.
Another potential downside of having an older credit card is that you may not be getting the same perks and benefits that you would with a newer card. Credit card companies are constantly trying to outdo each other with new and improved perks, so it’s possible that your older card doesn’t come with some of the same benefits as a newer one would. For example, newer cards may offer things like extended warranty protection, purchase protection, or rewards programs that older cards don’t have. If you’re interested in getting these sorts of benefits, you may need to consider upgrading to a newer credit card.
You may be carrying a balance
If you’re carrying a balance on an older credit card, you may be paying more in interest than you would with a newer card. That’s because older cards often have higher interest rates than newer cards.
You may also be missing out on rewards. Many newer cards offer rewards like cash back or points for spending. If your older card doesn’t offer rewards, you could be missing out on free money.
Finally, older cards may not have the same security features as newer cards. Some newer cards come with EMV chips, which provide extra security when you make purchases. If your older card doesn’t have an EMV chip, you may be at greater risk of fraud.
You may be missing out on new features
If you’re holding onto an older credit card, you may be missing out on some of the newer features and benefits that have become available in recent years. Here are a few things to consider:
– You may be missing out on new features: If your credit card is more than a few years old, it probably doesn’t have some of the newer features that have become popular in recent years. For example, many newer cards now offer rewards programs, cash back, or other perks that can save you money.
– You may be paying higher interest rates: Interest rates on credit cards have been climbing in recent years, so if your card has an interest rate that’s significantly lower than the current average, you may be missing out on potential savings.
– You may be missing out on sign-up bonuses: Many credit card companies offer sign-up bonuses to new customers, so if you’re still using an older card you may be missing out on potential rewards.
– You may be carrying around unnecessary weight: If your credit card is old and hasn’t been used in a while, it’s probably just taking up space in your wallet. Getting rid of it can help lighten your load—literally.