Breaking up is hard to do, but sometimes you just need to tell your credit card provider that it’s over. Whether it be that the interest rates on your current card are too high, and pushing you into debt, that the annual fees on your current card seem a bit exorbitant, or that you’re simply being left unimpressed by the service being given by your current provider, sometimes the best solution is to cut your losses and get a new card.
But this is easier said than done. Here are five key steps in switching to a better credit card:
1) Do your research
The Internet makes changing your credit card provider so much easier. Comparative websites will become your best friend in a world of products that seem to all do much the same thing to the untrained eye. These websites can show you everything from how to get a NAB Balance Transfer to help you pay off credit debt, to the range of high limit credit cards on the market, if you’re a big spender.
2) Decide whether a new card is right for you
This seems like a no-brainer. You’re probably saying: Well of course I think a new credit card is right for me, my old one is rubbish and I’m sick of it’s stupid fees. If I wasn’t sure, why would I have clicked on this article?But the thing is that if you’re the sort of person who wants to change credit cards, it means that there’s something wrong and changing cards might not always make it right. If you change cards too frequently, you will end up with a bad credit rating, which will hamper your financial prospects in the future.
3) Get rid of your card debt
If you find yourself consistently unable to make your repayments on your current card, stop. And read step one again. If you still think that you want to swap credit cards, you ideally don’ want to be carrying that debt around with you. Consider using a debit card for purchases in the interim between getting your new card and leaving your old provider. If it’s impossible to pay off your debt before joining a new provider, consider transferring the current debt onto a balance transfer card from a credit union, not a bank. These cards have a fixed interest rate, and can be useful in finally shaking that big, black cloud of debt.
4) Don’t burn bridges
It can be tempting to just call your current provider and tell them you’re leaving in the hope that you will threaten them into a better deal. Bad plan. Think about your credit rating. If you annoy your current providers too much, they may cut your credit limit, which will hurt your credit score. Cordiality is key.
5) Don’t be fooled by the shiny packaging
˜Only 1% interest for the first three months! bright new sign out the front of your bank will say. But don’t be fooled. Always read the fine print on special offers, particularly those with extra low introductory rates, as they nearly always mean ridiculously high fees and rates once the introductory period is over. Sometimes the bank’s old offer is better in the long run even if it doesn’t have such a spiffy billboard.
Author bio: Frances Ward is a Sydneysider who is teetering dangerously close to her credit limit this month. Perhaps a bank transfer is in order?
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Written by Jon the Saver
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Of the options mentioned # 4 would be my starting point, but with a different approach. If you are looking for a lower interest rate, and paying on time the bank considers you a profitable customer, and will lower your rate if you ask the right way.
If you go the route of closing your existing account and applying for new cards you may suppress your score. Your average history length of trades may drop, and the inquiry and the new credit trade will have a dampening effect. Lenders sometimes raise rates when scores deteriorate to a certain point.
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It is triggered by the passion displayed in the post I read.
I actually do have a couple of questions for you if
And on this article Insanely High Rates? How to Switch to a Better Credit Card.
I was actually moved enough to drop a commenta response
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