How to switch credit cards

Moving to a better credit card deal can be a sensible way of managing your finances. But it’s important to know how to do it right. Here’s what you need to know.

Why you might want to switch credit cards

There are many reasons why you might want to switch to a new credit card. Some of the main ones are outlined below:

• To take advantage of a new 0% promotional deal on purchases, balance transfers or both
• To consolidate existing credit card debt and pay a lower rate of interest
• To take advantage of rewards or cashback offers.

5 steps to change your credit card

If you’ve decided to switch credit cards, you’ll need to follow the steps below:

1. Look for a credit card that best suits you

There are several different types of credit cards and it’s important to look for one that’s the best fit. If you’re after a balance transfer credit card or a purchase card, you’ll ideally want to look for one with the longest 0% promotional offer. But you should also compare fees to ensure you’re getting the best deal, and check what the APR will be once the 0% deal has come to an end.

If you’re looking at rewards credit cards, check exactly how you earn rewards or cashback and whether you have to pay an annual fee. Weigh up whether the rewards you receive are worth the cost of the fee.

2. Check your eligibility

Once you know which credit card you want to apply for, it’s a good idea to use a comparison site eligibility checker to see whether you’ll qualify for your chosen card. Eligibility checkers can show you the cards you’re most likely to get accepted for and they use a “soft” search on your credit file which won’t harm your credit score. In comparison, when you make a full application, lenders will run a full, “hard” search of your credit file.

3. Make your application

Once you’re happy to proceed, you can make your application. You can do this online via a comparison site or through the provider’s website. Many providers will also accept applications in branch (if they have one) or over the phone, but online applications can be much quicker. In fact, some providers will tell you whether you’ve been accepted in a matter of minutes.

4. Activate your card

Once your application has been accepted, you should receive your new credit card within 10 working days. You will then need to activate it, usually by phoning an automated number.

If you’re transferring a balance from an existing credit card to your new one, you’ll usually be asked to provide details at the application stage. Once your card has been activated, your new provider will usually carry out the transfer automatically, but your provider will get in touch if you need to do anything else.

5. Consider what to do with your old card

Once your new card is up and running, you may wish to close your old card account. This will reduce the risk of being charged fees when the card is not being used as well as reduce the risk of fraud.

However, closing your old account also means your credit utilisation ratio (the portion of credit you’re using out of the credit limit available to you) is likely to increase. This can have a negative impact on your credit rating, so it’s worth keeping this in mind, particularly if your credit score is low. You can read more about this in our guide on how many credit cards you should have.

Dos of switching your credit card

• Do check that switching credit cards will definitely benefit your finances.
• Do make sure you know how much you could be charged in interest and fees.
• Do make sure you clear your balance in full before any 0% promotional offer comes to an end – or move the debt to another balance transfer card.
• Do be aware that every credit application you make will temporarily lower your credit score.
• Do consider other forms of borrowing too, such as an overdraft or loan.

Don’ts of switching credit cards

• Don’t switch credit cards too regularly. Lenders prefer stability so if you’re constantly changing accounts, it can reflect negatively on your credit report.
• Don’t make too many credit applications in a short space of time as this can also have a negative impact on your credit score. It’s best to leave at least 3 months, preferably 6, between applications.
• Don’t forget about the balance on your old card – you’ll either need to pay it off in full or transfer it to your new card.

Will switching credit cards hurt my credit score?

Any application you make for credit can temporarily cause your credit score to drop. But it should pick up again, so long as you manage your new credit account well.

What’s more, if you’re switching to a credit card with a higher credit limit, your credit score could go up. This is because you’ll have a higher credit limit available to you, but if you’re only using the same amount of credit, your credit utilisation ratio will fall (which is good for your credit score).

Frequently asked questions

• How often should you switch credit cards?

  It’s best not to switch credit cards too often. Too many credit applications in a short space of time can be a red flag to lenders who may think you’re desperate for credit. Instead, having well-established, well-managed credit accounts can indicate to lenders that you’re a reliable borrower.

• Can I switch credit cards with the same bank?

  That depends. If your credit needs have changed and you want to move from a balance transfer credit card to a purchase card, for example, your bank may allow you to swap cards, provided you have paid off your balance in full.

  However, if you want to transfer a balance from one credit card to another, you won’t usually be able to if the cards are from the same bank or banking group.

• Will the switch involve a hard credit inquiry?

  Yes, when you make a full application for a credit card, the lender will run a hard search on your credit file to check your credit score and how well you can handle credit.

• Will I be eligible for any sign-up bonuses?

  This will depend on the credit card and the provider. Card providers usually only offer sign-up bonuses to new customers, but even if you’ve been a customer in the past you might not always be eligible. For example, to qualify for a welcome bonus with many American Express cards, you must not have been a customer for the past 24 months.