Switching credit cards: what you need to know

You may feel bound to your current credit card in the same way you are to a house or car. You’ve entered a contractually binding financial relationship and it would be too much to get out of it, right?Switching your credit card is actually much easier than breaking free of mortgage payments or other significant payment plans. Not only that, but there are significant advantages to switching credit cards, too. In this post, we’ll go over switching credit cards in detail: what are the advantages, what to consider, how it all works, and what to avoid when you’re doing it. Above, let us help you answer the question of whether or not you should in the first place. 

Before deciding to switch credit cards, go through your financial situation and find reasons supporting the decision. Why do you feel, now, that you need to?Let’s go through some of the top reasons for switching credit cards.

For better or worse, you may be in a different financial situation than you were when you first applied for your current credit card. A new job or expense may have entered your life, suddenly making either the repayment plan seem more difficult than it used to, or the credit allowance feel needlessly limiting. Don’t remain chained to your current credit card plan when your financial situation changes. If you’re paid up and the consequences of switching aren’t going to cause any problems, it might be just the thing you need to match your new financial situation. 

Brand loyalty has its benefits, but that doesn’t mean you can’t shop around. Keep up to date on new deals, updates, new cards, and anything else that might better suit you right now or in the future. 

Similar to a change in your financial situation, you may suddenly find yourself benefitting from different rewards.For example, after landing a new job that requires you to move overseas, you’re suddenly flying more frequently to visit family and friends back home. If your old credit card doesn’t do much for frequent flyer miles, maybe it’s time to find one that does. Ditto for homeowner benefits when you’ve finished paying off your first home, fuel discounts when you start driving, etc. 

If you’ve determined switching credit cards will work out for you, there’s a few more things to consider. Certain financial conditions might be exacerbated by switching credit cards, despite the advantages you first discover. Ask yourself these questions before committing to a card change:

What are your main concerns that you hope changing credit cards will address? If you’re suddenly flying more, an airmiles credit card could soften some of the costs with rewards that build up over time. If you want to save on grocery shopping, you could look into a supermarket rewards card. Go into switching credit cards with a specific purpose. It will control your spending better and focus your rewards, ultimately enriching your financial life. 

Big purchases are going to disrupt your financial situation considerably. Because of this, you should avoid changing your situation further with a credit card change. Doing so could leave you open to credit score damage, because your credit will be assessed before being approved for the credit card. The assessor may give you a lower score due to you payments on a house or car or some such expense. 

There’s a possibility the card issuer of your new card might turn you down. Assess your own credit situation before switching credit cards: 

It’s advisable to have your credit score determined before deciding to switch, so you can prepare in advance for a rejection. 

Once you’ve decided the kind of card you want and you’re sure it’s the right decision, there’s a few steps required to reach your goal.

If you’re sticking with the same issuer but applying for an upgrade, the process should be pretty simple once you contact your card issuer and ask to be walked through the process. 

Once you’ve contacted your card issuer, make sure to ask the questions that will clarify your new credit card payment conditions. 

The more you know when it comes to switching credit cards, the better. Think of this as your last chance to back out of switching credit cards, if you don’t get the answers you’re hoping for. 

Also called ‘credit inquiries’, ‘hard’ and ‘soft’ describe the kind of inquiry being made into your credit history. A credit inquiry will occur when you’re committing to a credit card switch or large purchase that will put you on a payment plan. Instigators for a hard credit pull include:

Soft credit pulls are when your credit history is brought up for something that isn’t a financial obligation. Rather than assessments of your ability to pay for something, a soft pull is more of a background check by an organisation that wishes to know more about you. Where hard pulls always require your permission, soft pulls occur without your input and possibly even without your knowledge. Calls for a soft credit inquiry include: 

Our financial situations often change, and we can adapt our current payment plans to fit those changes. Switching credit cards can be a great way of doing this, especially when the rewards programs better suit your new living situation. The important thing is to take time in making the decision and be sure you’re tackling it in the right way.