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How to switch credit cards

how to switch credit cards

Borrowers can switch credit cards by applying for new credit products and closing their current account. Applying for a new card with the same creditor may prevent a new inquiry on your credit report and a decreased credit score. 

Switching cards can help borrowers get better rewards and lower rates. However, only about 85% of cardholders have a card that offers a rewards program.1 If you want to learn more about the credit card industry and how switching your credit card works, keep reading!

What Is a Credit Card Product Change?

Credit card companies offer many different products and services. In fact, each individual credit card they offer is considered its own unique product. Credit issuers can launch new credit cards featuring different benefits and rewards programs, or they can discontinue certain card types if they prove to be unpopular. 

When borrowers apply for credit cards, they are applying for one specific product, not every product the creditor offers. So, if the company introduces another card/product that looks more appealing to you than your existing credit card, you will have to either reapply for the new card or ask your issuer to switch your account over to that new product. 

If your credit card issuer grants your request to switch your account over to another card, this would be called a credit card product change. 

Do All Credit Card Issuers Allow Product Changes?

If it means keeping you on as a customer, most credit card companies are willing to make product changes. However, there are some hard rules they must abide by. For example, you cannot switch from a personal credit card to a business credit card, unless you show proof that you intend to use the new card for business purposes only. 

Another common rule many credit card issuers have is they only allow product changes within the same “family” of cards. This “family” may refer to a group of co-branded cards associated with a specific partnership or a group of cards designed for specific borrowers, such as low-credit borrowers. 

To find out if your credit card issuer offers product changes, you can visit the issuer’s website online, call, or visit the issuer’s brick-and-mortar location to talk to an agent in person. 

What To Consider Before Requesting a Product Change

Before jumping in and requesting a credit card switch, think about the following: 

  • Why do you want a credit card product change, and are there alternatives?
  • What are your current credit card benefits?
  • What is your current financial situation like?

Consider Why You Want to Switch Cards

Do you want to switch credit cards to take advantage of better benefits, or are you just looking for more money? These answers will help determine if a switch is right for you. If all you want is a credit limit increase, switching to a brand-new card may not be necessary. But, if you want to receive benefits your current credit card doesn’t offer, then a switch might be an advantageous move. 

Think About Your Existing Benefits

When you switch credit cards, your old benefits from your previous card are often lost. If you have a significant amount of cash back, travel points, or other rewards left on your card, use them up before you switch products. 

You should also keep in mind that some card benefits, like a sign-up bonus, may not be eligible for borrowers who are switching products. 

Look at Your Current Financial Situation

Lastly, take a look at your current finances and existing debt. Borrowers who have an unbalanced debt-to-income ratio may not have such an easy time switching credit card products. It may be a smarter choice to knock down your balances and reduce your debt before requesting a switch. You can use a free debt calculator to calculate your repayment plan. 

Step-by-Step Process for Switching Cards

Requesting a switch is a relatively simple process; here’s how it works! 

StepDescription
Step OneGather Your Basic Information 
– Credit card account number.
– Recent income information.
– Your most recent credit report.
Step TwoTalk to a Customer Service Representative
– Contact your credit card issuer and discuss different credit card products available.
– Mention any specific card product you are interested in.
-Request the switch to the desired credit card.
Step ThreeImplement Updates Where Needed
– Activate the new card once received.
– Update saved data and automatic payments with new card information.

Why Should You Switch Credit Cards?

There are a few reasons why it may be advantageous to switch out your credit card for a new product. You can get a new credit product without racking up another hard credit check on your credit report, and you can also take advantage of awesome new perks! 

No New Credit Inquiries on Your Credit Report 

Every time you apply for a loan, line of credit, or other financial product, the financial institution will perform a hard credit inquiry. Credit bureaus keep track of hard credit inquiries, also called hard credit checks, and record them for your credit report. 

You may find that your score drops about five points every time a hard credit inquiry is pulled against your credit profile. But, if you are simply switching credit card products, you won’t have to go through the application/hard credit inquiry process. 

New Perks Without Canceling Your Existing Credit Card

If you want to take advantage of a travel rewards card or cash-back card program, you may be able just to switch cards instead of applying for a brand new account. The default rate for many cards is 1% cash back, but the best cards pay 1.5% or 2% back.2 You may also be able to enjoy other benefits like a lower annual fee. 

How Will Switching Credit Cards Affect My Credit History?

When used responsibly, switching out your credit card shouldn’t have a negative impact on your credit scores or credit reports. In fact, depending on the product you switch to, a product change may actually help your credit score improve. If you receive a new card with a higher credit limit, your credit utilization will improve, which means there is a good chance your credit score will go up the next time you pull a report! 

Guide to Closing Old Credit Card Accounts

Closing old credit card accounts may help you keep your finances organized and prevent fraudulent transactions on the account. But remember that closing an account could negatively affect your credit score. A closure may impact your utilization ratio and the average age of your credit accounts, both of which are factors in your credit score.

Knowing that, here are the key steps to follow to close an unused account:

  1. Redeem Rewards — Before closing your account, make sure to redeem any rewards (like cash back, points, or miles) that you’ve earned. Once the account is closed, you’ll typically lose these rewards.
  2. Pay Off or Transfer the Balance — Ensure that your card balance is fully paid off. If you can’t pay it off, consider transferring the balance to another card, but be mindful of balance transfer fees and the interest rates of the new card.
  3. Check for Recurring Payments — Go through your account statements to identify any recurring payments linked to the card. Switch these payments to another card or account to avoid missed payments and potential service disruptions.
  4. Contact the Credit Card Issuer — Call or email your credit card issuer to inform them of your decision to close the account. It’s important to retain proof of the closure and not just stop using the card, as the account will remain open and may incur fees. Retain a copy of the written confirmation and any correspondence related to the account closure. Also, note down the details of your phone call, including the date and the name of the representative you spoke with.
  5. Check Your Credit Report — After a few weeks, check your credit reports from the major credit bureaus to ensure that the account status is marked as “closed” by the account holder. 
  6. Dispose of Your Card Securely — Once the account is closed, cut up the card or dispose of it using a shredder. Make sure all the numbers and the chip are completely destroyed to avoid fraudulent activity.

Alternatives To Switching Your Credit Card

Don’t think switching cards is the right choice for you? No problem! Thankfully, there are other ways to access additional funds that don’t require product switching.

Request a Credit Limit Increase

Instead of going through the ordeal of doing a credit card product change, consider asking for a credit line increase. If you are simply looking for a little extra money each month, totally switching cards may not be necessary. 

You can request a credit limit increase by contacting your credit card company and letting them know you would like to boost your available credit. The issuer will then look at your credit score and recent financial history and get back to you with their decision shortly. 

Seek Out Other Financial Options

Credit cards aren’t the only way consumers can access funding. If you have a specific one-time purchase you are looking to make, it may not be necessary to request a product change or credit limit increase. Instead, you may be better off with a one-time personal loan.

Personal loans can come in the form of debt consolidation loans, bad credit loans, or even secured loans. Just be sure to research lenders and loan products before you submit an application. 

Dip Into Your Emergency Fund 

There are also ways to get additional funding that do not require credit cards or loans. If you have a savings account or emergency fund, you may consider dipping into it to pay for the expenses you are looking to cover.  

You can also look for creative ways to save money if you are tired of being broke all the time. For example, you can reduce your monthly expenses, consolidate debt, or shop at discount and bulk stores.

FAQs About Switching From One Credit Card To Another

How does switching cards affect my credit history long-term?

Switching cards can have a minimal impact on your credit history in the long term, especially if managed responsibly. Just keep an eye on your outstanding debt and payment history!

Will my credit take a hit if I switch to a new card?

Initially, there might be a small dip in your credit due to the closure of your old account and the opening of the new one. However, this is usually temporary and can be balanced with good credit habits.

Can I avoid paying an annual fee by switching cards?

Absolutely! If you’re eyeing a card with no annual fee, switching can be a smart move to save some money. Just make sure the other benefits align with your needs.

Is it possible to retain my current sign-up bonus when I switch cards?

This depends on your credit card issuer’s policies. Some bonuses might not transfer, so it’s a good idea to check with them or review their own proprietary website rules.

What happens to my existing rewards when I switch to a new credit card?

Typically, you’ll need to use your existing rewards before switching, as they might not transfer to the new card. It’s best to redeem them so you don’t lose out!

How do I find out if my current issuer allows me to switch to a new credit card?

The easiest way is to check your issuer’s website or directly contact their customer service. They can provide the most accurate information about available options.

Will switching credit cards affect my relationship with my current issuer?

Not necessarily. If you’ve been a responsible borrower, switching cards within the same issuer can be seen as a continuation of your existing relationship.

Can I switch to a card with a higher credit limit?

Yes, you can! If you’re eligible, switching to a card with a higher limit can improve your utilization ratio, which is great for your credit scores. Just make sure to manage the new limit responsibly.

What CreditNinja Wants You To Know About Credit Card Product Changes

While credit card switching is a straightforward process, it may not be for everyone. Before you contact your credit card issuer about switching products, you may want to seek out simpler alternatives like limit increases or installment loans

CreditNinja is a lender that provides online loans. However, we also have an online blog that answers all types of questions regarding personal finance. If you want to know more about credit cards, improving your credit, or even other types of loans, check out the Dojo!  

References: 

  1. Americans Of All Incomes Reliant on Credit Card Rewards During Holidays │ Yahoo
  2. How Do Cash Back Credit Cards Work? │ Time
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