I recently called one of my credit card companies to cancel our primary credit card. We ran nearly every possible expense through this card but recently switched to a different one with a better rewards program.

Me: I’d like to cancel this credit card.
Bank Rep: What makes you want to cancel?
Me: I don’t like how the reward program works.
Bank Rep: OK, I have canceled the card. Thank you for calling.

Wow. I didn’t want to argue with him for five minutes as he tried to convince me to stay, but I was a bit surprised that he didn’t even try. We ran about $30,000 a year through this card. Since we paid it off each month and didn’t pay an annual fee, all the bank earned from us is their 3 percent transaction fee, paid by the merchant. Then the bank paid us 1 percent cash back. So our business was worth about $600/year to them, which apparently is not enough to make us worth their time.

I wonder if the rep would have fought harder to keep us if we regularly carried a balance or did things like paying late or getting cash advances to run up fees? On the other hand, I got the impression that the rep simply didn’t care and was only doing his job.

New Law

As you might have read, a new law went into effect in February that eliminates some of the more outrageous tricks that lenders had used to wring money from credit card users. As a result, expect to see a higher emphasis on fees from them. This CNN article discusses some of the traps to avoid. Lenders are also tightening requirements and being more stingy with credit, which affected us when we applied for our new card. For the first time, the lender required me to verify my income before issuing the card. Once they issued it, Chase gave us a pitiful credit limit, apparently because we had a very large amount of available credit with our other bank. Now that I’ve closed the other card, we should be able to get a higher limit on the new card.

Recommendations

As a bonus, here’s my totally unsolicited advice on credit cards:

1. Pay off your cards each month. If you can’t pay for something when the bill comes due, save until you can. I don’t even know my interest rate because it doesn’t affect me.
2. If you aren’t disciplined enough to limit your spending and pay off your cards each month, don’t use credit cards and pay cash instead.
3. If you have to pay an annual fee or aren’t getting at least 1 percent back on all purchases, fire your lender and get a better card. Check BankRate to compare credit card deals.