When you should close a credit card and how to do it right

Half of millennials say they've had their current credit card longer than their current romantic relationship. Matt Schulz, the chief industry analyst with CompareCards, says that isn't a good thing.

That first credit card that you may have gotten in college or in your early 20s probably has a high APR (annual percentage rate), high fees, and little or no rewards, Matt says, and you can do better.

So how do you know if you're paying too much interest?

Matt says a 17-percent APR is the average for new offers. If you're in the 20-percent range, he says, you're paying too much.

If your rate is high, Matt says you should start by calling your credit card company. You would be shocked, he says, at how successful people are when they call their credit card company and ask for a reduced interest rate or a fee waiver.

Around two-thirds of people who ask for a reduced APR get it, and the average reduction is about 5 points. Be sure to mention how long you've been a customer, if you always pay on time, and if you've received better offers somewhere else. Those arguments will help your case when asking for a better deal.

If you can't work things out and it's time to move on, you can compare rates on www.comparecards.com, to find the credit card that works best with your spending habits. Matt says it's really all about how you use the card and what you want to get from it.

Don't be afraid to close a card. If you do it right, closing a card won't hurt your credit score. How do you do you close a card correctly? Make sure you maintain the same available credit.

Matt says what really impacts your credit score when you're closing a card, is something called your utilization rate. That's how much you owe compared to how much your available credit is.

So, he says, if you have a $10,000 available balance and $3,000 in debt, your utilization rate is 30 percent. That's right around where it should be.

But, if you close a card and suddenly only have $5,000 in available balance, but you still have that $3,000 in debt, all of a sudden your utilization rate is 60 percent. Matt says that can be real trouble for your credit.