Should I Get a New Credit Card?

I recently came across a post on cash back credit cards over at MillionDollarJourney. He also has a follow up here. RedFlagDeals also has a good comparison of rewards cards which is worth a look.

It got me to thinking that maybe i should get a new credit card and ditch the old one. I currently have a Scotia Value Visa with a fairly low interest rate of 11.4%. However, i pay an annual fee of $29 for this low interest rate. This was fine when i was carrying $5000 balances month after month as the annual fee easily paid for itself with the savings on interest. Now though, i have no credit card debt and pay off any balance every month.

So my rationale is to get rid of the Scotia card as i am now wasting $29 a year for something that is not providing any benefit. I would then get one of the cash back cards that pay cold hard cash in exchange for using it. I like the idea of getting actual cash back in my pocket, and then i can choose how to spend it. I realize that some of the other rewards cards pay a slightly higher percentage payout, but those rewards don't appeal to me as much as cash.

There is one little hiccup. Actually two. I do not own my own place and am looking to do so in the near future. So i am hesitant to get a new credit card which would affect my credit score some. This could in turn affect the interest rate i would have to pay on a mortgage. I know i have a good credit score but don't want to mess with it until after having bought a place.

The second hiccup is that i would be a little worried i would actually spend more on my cash back credit card than normal just for the benefit of the extra cash i would get back. This actually happened once before when i had a GM Visa with a certain percentage going toward a new vehicle. I paid for everything with my GM Visa and did not pay attention to how much money was flowing out of my pocket. So if i were to get a new cash back card i would have to be very careful and extremely vigilant about not spending more than what i need to.

The Bottom Line

For now i think i will hold off on the new credit card until i have obtained a mortgage. Once i have the mortgage (and lots more debt to boot) then i will get the new credit card and cancel the current one. Food for thought.