This story and Ask the Readers question comes from Madeline Roche, who blogs at

I recently celebrated my one-year anniversary with my first and only credit card. Instead of popping some bubbly, I paid my $69 annual fee. Though not astronomical, this charge was unexpected and motivated me to evaluate my relationship with the little piece of plastic. I had pretty clear goals when I applied for the card, and there was no better time to conduct an Annual Credit Card Evaluation to determine if I was meeting my goals. If I wasn’t, I would adjust my relationship with the card to better achieve them.

What were my credit card goals?

  • To develop credit: I avoided having a credit card for as long as I could. But as I became more financially literate, I realized that a credit card would be a natural next step in building my financial history.
  • To avoid paying interest: I’ve never been fond of the idea of buying things that I can’t afford or paying interest on things I can. Therefore, I set a goal to charge my monthly expenses to the credit card, and pay it off in full every month to avoid paying unnecessary interest.
  • To rack up points: Traveling from Seattle to Chicago for Thanksgiving and Christmas is expensive. The idea of getting a few free flights home was—though it’s hard to admit—a huge incentive for me to apply for the credit card.

Annual evaluation: Am I achieving my goals?

  • To develop credit: Yes, having a credit card is helping me build my credit.
  • To avoid paying interest: Yes, I have successfully paid off each statement in full, avoiding high interest rates.
  • To rack up points: Here’s where it gets tricky. I added up all my monthly miles to find that I had received 16,125 Southwest miles from my yearly purchases, which when using the Southwest rate of miles to dollars, is equal to about $277 in Southwest dollars. When I subtracted the $69 annual fee, I made just over $200 in Southwest dollars. But, I needed to add the 50,000 bonus miles. The math showed that I made just over $1,000 in Southwest money, which paid for my two trips home for the holidays! But, here’s the catch: The first year will not be repeated. Instead, Southwest will give me 3,000 miles—$51 in Southwest money—every year after they charge me $69. So much for long-term rewards.

[Sidenote: I received 50,000 bonus points because I explained to both my banker and credit card issuer that I was under the impression I would receive 50,000 points, not 25,000, when I signed up. I was not being untruthful to either person as a way to gain more points; I was explaining to them that expectations were not met and they both chose to request the increase.]

Hidden costs

Looking at the numbers honestly helped me realize that my spending was not what earned me miles; instead, it was the one and only signing bonus that was exaggerated because of my misunderstanding. Even though I don’t gain substantial miles from my purchases, I spend more money on my credit card than I do when using my debit card (painful to admit, yes).  Maybe it’s the idea of racking up miles or the delayed payment that entices me to spend differently. Whatever it is, if I reviewed last year’s expenditures I would see a slight increase in my spending. Slight increase, however, can have major repercussions on someone with limited means. If I spent $75 more a month with my credit card than I would have with my debit card, I would be out $900 for no other reason than to gain a few miles ($900=900 miles, which equates to about $15 worth of Southwest cash). It isn’t worth it.

Moving forward

I have to change my relationship with my credit card because I can’t afford to spend an additional $900 every year. From here on out, I am going to only charge my transportation costs to my credit card (I won’t be enticed to buy more gas in exchange for miles), and return to paying for everything else with my debit card. This way I will continue to maintain a credit card that’s reported to the credit bureaus, which helps me with my goal of building credit, and not fall prey to the mile incentives.

Conducting my Annual Credit Card Evaluation was easy. Admitting that my spending had increased over the past year, however, was a bit harder. Conducting it helped me recognize that my relationship with the credit card was not helping me achieve my goals, and that changing it would. Now I am better equipped to achieve my goals and, I hope, save more money.

Do you do an annual review of your credit card? If so, how do you review it? How often do you ditch a card when it isn’t meeting your needs? Tell us!

GRS is committed to helping our readers save and achieve their financial goals. Savings interest rates may be low, but that is all the more reason to shop for the best rate. Find the highest savings interest rates and CD rates from Synchrony Bank, Ally Bank, GE Capital Bank, and more.

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