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Changing Credit Cards: How to switch credit cards
If you're not happy with your current card, you can switch to another one.
Maybe you’ve been eyeing your friend’s card because of all the complimentary perks and rewards they get that your card doesn’t provide. Maybe it’s a 0% for 21 months balance transfer that seems too good to pass up. Or perhaps you’re just looking for a card that offers a lower standard interest rate or no annual fee.
Whatever the reason for switching credit cards, it’s important to be mindful of a few factors to ensure the process goes as smooth as possible.
How do I switch credit cards?
These steps will help guide you through the process of changing cards:
- Compare credit cards to find an option that suits your needs.
Set intentions for what you’re looking for in a credit card, whether that be cash back, low interest, no annual fee, etc. Compare cards within your chosen category and find the one that best suits your needs.
- Apply for the credit card.
Make sure you satisfy the card’s eligibility requirements before applying. Applications are mostly done online and usually take around 10 to 15 minutes.
- Include details of your balance transfer if you have existing card debt.
Be sure to call your current credit card provider to ask for your entire outstanding balance for closing the account. This will help ensure you are transferring the full balance and don’t get stuck with a small amount owing on the old account.
- Wait for card approval, then activate your new card.
It can take just one minute to receive an approval notice once you apply online and your application is approved. Your new card may take up to two weeks to arrive. Activate it following the instructions provided with the card.
- Transfer direct debits to your new card.
Before you cut up your old card, you need to make sure there are no direct debits 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 direct debits you had on your old card is to look over your transaction statements for the previous 12 months. Then call these companies and inform them of your new credit card details.
- Settle the balance on your old account and close it.
This will help avoid any more potential charges on the account, e.g. annual fees, and also eliminate the possible temptation of using it again.
What is a product change?
Some issuers may let you upgrade or change an existing card that you own instead of applying for a new one. Capital One, Chase and Bank of America are just a few issuers that allow such upgrades. This can help preserve your credit score or help you circumvent credit card limitations such issuers impose on cardholders.
What to consider before switching credit cards
Before you apply for a new card, make sure you 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 with a new card?
If your current credit card isn’t giving you enough value, pinpoint which features you want with your next card.
- 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 you’ll be happy with long term. Think about how and how often you will use the card, as well as the benefits you want to be included with the account. Once you’ve identified your needs, you can start to look for the card that will best cater to them.
- Do you meet the requirements for a new credit card?
Your switch could go sour if the card you want is out of your reach, particularly if considering an upgrade. Always make sure you meet the eligibility requirements before getting ready to switch.
- Do you have existing credit card debt?
If the answer is yes, you might want to consider balance transfer credit cards, or a credit card with a balance transfer offer that also fulfills your other needs, such as a 0% intro APR period.
- 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 also need to consider this: are your current credit provider and new credit provider affiliated? Are the two credit cards in question issued by the same credit issuer despite bearing different names? Depending on the offer, this could limit your options when you want to switch cards for a promotional offer.
- Do you have direct debits on your current card?
This is more of an inconvenience than an actual deciding factor, but one you have to address nonetheless. When changing cards, you’ll have to take stock of existing direct debits and make the necessary calls to update your service providers with the details of your new card. This will help prevent any possible late fees or dishonor fees.
- How will switching credit cards affect your credit score?
Applying for too many credit cards will affect your credit score. Before going on a credit card shopping spree, consider which card will be best suited for your needs and apply only for that card.
You can upgrade your card with the same provider
Most credit card providers allow you to upgrade your card, often without making a hard pull on your credit. Contact your card provider for more details.
What to look for in a new credit card
Once you’re clear on why you’re switching, you can start comparing your options for a new card. Here are the key features and details to consider:
- Promotional interest rates.
This could be the very reason you’re changing cards, but look widely and look carefully. There is usually more than one credit card provider offering the same promotional rates. Sometimes you might even find a better offer than the one you had in mind.
- Standard interest rates.
These are the interest rates that normally apply for transactions on the account. If there’s a promotional rate offer, the standard rates 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.
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. Many card providers offer their own reward programs, while some are linked to specific frequent flyer programs such as Delta or American Airlines. Whatever your preference in a reward program, make sure you consider the number 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 insurance, personal concierge services, purchase protection insurance and flight vouchers. Some premium credit cards even offer airport limousine services and airport lounge access. But these benefits often attract a higher annual fee, so they may not be worth it if you’re not a regular credit card user or frequent traveler.
- Annual fees.
Some cards charge an annual fee, and generally, the cost goes up based on the range of perks available. The rule here is to make sure you’re not paying more in fees than the actual benefits you’ll derive from the card.
- Other fees.
Always read the fine print before signing up for a new card, and be aware of any possible fees you could incur. Some of the most common include balance transfer fees, cash advance fees, ATM withdrawal fees, foreign transaction charges and late payment fees.
Whatever your reasons for switching, and whichever credit card you decide on, always make sure you thoroughly compare cards and fees beforehand so that the change is worthwhile. Remember to think long term, because changing cards too often can sometimes look bad on your credit report.
Compare rewards credit cards
These cards offer rewards and perks to give you added value every time you use your card. Consider getting a second credit card that earns rewards in a category your current card doesn’t. For example, if your current card earn points on gas, apply for a card with grocery rewards to cover even more everyday purchases.
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