Credit cards are a convenient and quick way to pay for goods and services both in person and online. Many come with fantastic introductory offers to tempt you into applying, but over time they fade away and you are getting less from your card than you used to.
Switching credit cards can give you access to increased credit and better benefits, but how do you do it? This guide is going to make it plain and simple for you and will let you know why you should switch and how.
Why You Should Switch Your Credit Card
No two credit cards are exactly the same. Each has its own rates, benefits, and penalties for late or non-payment. Many can tempt you with teaser rates and initial incentives that change over time. The credit card you applied for just a year or two ago may have changed dramatically as bonuses and low rates time out, leaving you paying more for less.
Tally has a handy guide on refinancing a credit card that shows you all the benefits that can come from making a switch. They have been helping people boost their credit scores while reducing their credit card debt for years. Can you refinance a credit card? The answer is yes, and Tally can help you get a better deal.
Refinancing your card with a new provider can give you access to lower interest rates and better value bonuses, helping you reduce your debt while your spending remains the same. By paying down your card you boost your credit rating which can help you to raise your credit limit or get financing for a car, or a mortgage for a home.
How To Switch Your Credit Card
This step can be done relatively easily if you can find the right credit card to switch to. A new provider will be eager to help you make the switch and move your balance to them, after approval. This makes the switch quick and painless for you. The new card should arrive ahead of time so you can start using it right away and make your purchases with it instead of your old credit card provider.
Changing your card to one with the same bank or credit provider is even easier, and can often be done almost instantly. If your current provider has a better card with lower rates and higher quality benefits, you should consider switching to that instead of looking for a new deal with a new provider. Your current card supplier will want to keep you as a customer and will do everything they can to keep your business.
Even if your current supplier has an attractive credit card for you to switch to, make sure you take a good look around to see what else is available. Interest rates are important, but the benefits and offers that come with a card can sometimes make a switch to them worthwhile even with a higher rate.
Cash back cards, for example, can give you back a percentage of your purchases which can make them cheaper to use than some other cards. Balance the benefits with the interest rates and consider how often you will use the credit card and your average monthly spending.
What You Should Know Before You Switch
Most credit card switches will not negatively affect your credit score. In fact, switching to a new card can have a positive effect, especially if lower interest rates allow you to pay down your debt more quickly. Depending on which card you choose and the benefits it offers, you could damage your credit score if it has a lower credit limit than your existing card. This means you will be using a greater percentage of your limit on your new card, reducing the amount of credit you can utilize, which negatively affects your rating.
Whenever you are making a switch, you should always look for a credit card with a higher credit limit than you currently have. This will increase the amount of credit you can utilize. Having this excess credit but not using it will boost your credit rating, which can help you find other types of financing like mortgages or car loans. It can also give you access to credit cards with lower interest rates or more attractive benefits in the years to come if you decide to switch again.
Be careful when applying for new credit cards. Most credit card companies, especially if you have a history with them, will only do a ‘soft’ credit check on your finances. Some companies may do a ‘hard’ check before deciding whether or not to approve your application. These hard checks can sometimes cause your credit rating to dip slightly; repeated or multiple applications will multiply this effect.
Switching your credit card can have enormous benefits to your credit rating, your credit limits, and the amount you pay in interest every month. Take a look at the cards available to you, and consider making the switch today.