How to Switch Credit Cards
You’ve decided your current credit card is no longer the right option for you. How do you go about switching credit cards? Can you transfer the balance? Switching to another card by the same issuer may be an attractive option, with plenty of benefits as well. Why would you want to switch credit cards in the first place? Here’s how to switch credit cards to something newer and hopefully better.
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When to Switch Credit Cards
There are a few times where switching credit cards is the most sensible course of action. You may want to transfer your balance from one card to another to take advantage of a better interest rate. You might be considering canceling a card in order to avoid an annual fee, or because the rewards are no longer attractive to you.
Before switching cards, it’s important to know that there will likely be a balance transfer fee, though some institutions will waive this if you are switching between their products or downgrading. Keep this in mind, especially if you are trying to take advantage of a lower interest rate.
Let’s look closer at the reasons why you would switch cards, and then explore how to switch to a new card.
The first major reason of why you should switch credit cards is interest rates. When you first opened the account, there may have been low or no APR, but now the introductory interest rate has been replaced with a normal rate. Rather than racking up interest payments, you would rather switch to a different card. Alternatively, you may have had a lower credit score when you first applied for a certain card. Now that you’ve managed to boost your score, you may simply want better terms that reflect your improved credit status — including a lower interest rate.
Similar to avoiding interest rates, you might switch cards in order to consolidate debt, thus reducing your interest payments. For example, if you have three cards, all maxed out, with normal interest rates, you could be paying more than $100 just in interest payments each month — even that might only cover the interest from one of your three cards, depending on your credit limit.
By switching to a single card, you can take advantage of an introductory offer and pay less overall on interest. However, if you miss a single payment, the offer could go away, resulting in a higher interest payment.
Back when you opened the account, it seemed like the best credit card for you. Now, however, your life has changed, and the rewards from the card no longer make sense for you. If possible, consider switching to a credit card with the same lender, but with different rewards, in order to preserve your average age of accounts. As switching credit cards within the same lender typically does not change credit accounts, you will normally get a new card (and possibly new terms) associated with the same old account, thus saving you from a credit score hit. Downgrading a card to lesser rewards can also remove an annual fee.
This also does not count as a hard inquiry as you are not actually applying for a new card, again saving you from a dip in your credit score. This can also be helpful if you are churning credit cards for rewards, as keeping a downgraded credit card open, especially one with no annual fee, will counter opening multiple credit cards. In either case, it’s possible to switch cards without hurting your credit — it’s just a matter of switching cards within the same lender’s products.
Speaking of annual fees, not wanting to pay them is another reason for switching credit cards. If you aren’t using a card with fees to the fullest, or like the last point, the rewards aren’t worth the fees anymore, it’s time for a switch. Or if you have too many cards with annual fees, and you need to cut down, consider switching to another card.
The actual switching might be the easiest part. Simply call your lender, or the lender you want to switch to, and tell them your plans. It’s important you have a plan, especially if you are transferring balance, and tell your lender your goal. It’s not unheard of that, for example, that after negotiating they may waive an annual fee for another year in order to keep you on the card.
Remember to redeem any rewards you may have accrued from the card before switching, or they could be lost. If you find that you are denied a switch due to your credit score, check out our credit repair guide, or consider switching to a secured credit card to start rebuilding your score.
A former newspaper journalist, Cole spends his free time reading, writing, playing video games, watching movies, and learning about every subject under the sun. He lives with his wife and daughter in Idaho. Follow Cole on Twitter: @ColeMayer42
This post was updated February 28, 2019. It was originally published September 5, 2017.