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6 easy ways to switch credit cards
Not happy with your current credit card? Switching to a new credit card is simple.
Maybe you’ve been eyeing a different credit card because of the complimentary perks and rewards it offers, or perhaps you’re tired of paying a high annual fee. Whatever the reason to switch credit cards, here are a few important factors that you need to keep in mind.
How do I change credit cards?
These steps will help guide you through the process of switching credit cards:
- Compare credit cards. When making the decision to switch credit cards, it’s important to compare a variety of different credit cards in order to find an option that suits your financial needs and spending habits. Decide on the type of credit card you’d like, whether it’s a travel rewards card, a no annual fee card, a cash back card, a balance transfer card or a different type, so you can make your comparisons in that specific category of cards.
- Apply for the credit card. Before applying, make sure that you meet the card’s eligibility requirements. Applications are mostly done online and usually take around 10–15 minutes, as long as you have the necessary documents and information on hand.
- Include details of your balance transfer. If applying for a balance transfer, you’ll need to provide details of your old accounts and the dollar amounts on your application. Call your current credit card provider to ask for the entire outstanding balance on your account. This will help ensure you’re transferring the full balance and don’t get stuck with a small amount owing on the old card.
- Wait for approval, then activate your new card. If applying online, you can be notified in as soon as one minute if your application has been approved. Your new card may take between 5 and 10 business days to arrive, and when it does, you will need to activate it by following the instructions provided with the card.
- Transfer pre-authorized payments to your new card. Before you cut up your old card, you need to make sure there are no pre-authorized payments still attached to it. These could attract penalty fees if they’re declined because you have closed the account. An easy way to check what pre-authorizations you had on your old card is to look over your transaction statements for the previous 12 months and call these companies to inform them of your new credit card details. You will need to provide your new credit card number, expiry date and verification code.
- Settle the balance on your old account and close it. This will help avoid any potential charges on the account, like annual fees or pre-authorized payments you forgot about – and also eliminate the possible temptation of using it again.
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What to consider before you switch credit cards
Before you apply for a new credit card, ask yourself the following questions so you’re clear on what type of card to look for:
- Which credit card features are you looking for? If your current credit card isn’t giving you enough value, pinpoint which features you want when you switch credit cards.
- How will you be using the card? Changing cards isn’t without its inconveniences, so thinking this through first will help ensure you choose a card that you’ll be happy with in the long term. Think about how and how often you will use the credit card, and once you’ve identified your needs, you can start to look for the card that will best cater to them.
- What is the minimum and maximum amount of credit you want? When you switch credit cards, choose your credit limit with care. You need a limit that enables the occasional large purchase, but that doesn’t encourage you to overspend. As a guide, you should only spend up to 70% of your credit limit if you can, which is the recommended credit utilization ratio for a good credit score.
- Do you meet the eligibility requirements for a new card? Your switch could go sour if the card you want is out of your reach, particularly if you’re looking to upgrade. Always make sure you meet the eligibility requirements before getting ready to switch credit cards.
- Do you have existing credit card debt? If the answer is yes, you might want to consider a balance transfer credit card, or a credit card with a promotional balance transfer offer that fulfills your other needs, such as a low annual fee or rewards points per $1 spent.
- Is there any connection between your current provider and the new card provider? When it comes to introductory promotions such as balance transfers, you will usually need to be a new customer. Depending on the provider you’re currently with, this could limit your options when you want to switch cards for a promotional offer.
- Do you have pre-authorized payments on your current card? This is more of an inconvenience than an actual deciding factor, but one you have to address nonetheless. When you switch credit cards, you’ll have to take note of existing pre-authorizations and make the necessary calls to update your service providers with the details of your new card. This will help you avoid any possible late fees or dishonoured payment fees.
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What to look for in a new credit card
When comparing different credit cards, here are the key features to consider:
- Promotional interest rates. This could be the very reason you’re switching cards, but remember that a promo rate will end sooner than later. There is also usually more than one credit card provider offering the same promotional rates, so be sure to compare different cards and providers to find the right one for your needs.
- Standard interest rates. These are the interest rates that apply for transactions on the account. If there’s a promotional rate offer, the standard rate will apply at the end of the introductory period. Make sure you consider these rates when looking at new cards, because you don’t want to be stuck with high interest charges in the long term if you decide to keep the card beyond the promotional period. Interest-free days on purchases are an ideal way to avoid paying interest, with providers usually offering between 21 and 55 days interest-free.
- Rewards. If you’re looking to earn points for spending on your new credit card, it’s worth comparing the rewards you can earn and redeem. Some card providers offer their own rewards programs, while others are linked to specific programs such as Air Miles or Aeroplan Miles. Whatever your preference in rewards programs, make sure you consider the amount of points per $1 you’ll earn, as well as how many points you’d need for a reward such as a flight or a gift card.
- Complimentary extras. Many credit cards come with additional perks such as complimentary travel and car rental insurance, purchase protection insurance and flight vouchers. Some premium credit cards even offer valet parking, flight upgrades and worldwide airport lounge access, however these types of cards often attract a higher annual fee, so they may not be worth it if you’re not a regular credit card user, a high earner or a frequent traveller.
- Annual fees. Most credit cards charge an annual fee, and generally the cost goes up based on the range of perks available. For example, black credit cards provide a wide range of luxuries and have annual fees ranging from $350 to $800, while standard credit cards normally incur fees between $0 and $150. The rule here is to make sure you’re not paying more in fees than the actual benefits you’ll get from the card when you decide to switch credit cards
- Other fees. Always read the fine print before signing up for a new credit card, and be wary of any possible fees you could incur such as balance transfer fees, cash advance fees, ATM withdrawal fees, foreign transaction charges and late payment fees.
Still not sure which type of credit card is right for you? Take our quiz.
Bottom line
Whatever your reasons for wanting to switch credit cards are and whichever card you decide to change to, always make sure you thoroughly compare cards and fees beforehand so that the change is worthwhile. Remember to think long term, since changing cards too frequently can often damage your credit score and look bad on your credit file.
Once you’ve made the decision to switch credit cards, keep in mind your introductory offer will last for a specified period of time, so do what you need to do before the offer period ends – whether that’s paying off your debt or spending a certain amount of money in the first three months to get your welcome bonus points.
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