A guide to switching credit cards

Switching from one credit card to another can be a smart way of managing your finances. We’ve put together some dos and don’ts if you’re thinking about switching cards.

Alex Hasty

Insurance and finance expert

minute read

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Last Updated 8 APRIL 2022

Why might I want to change credit cards?

Some of the main reasons people look to switch credit cards are to:

Get rewards for spending, like cashback, vouchers or air miles.
Take advantage of a 0% promotional deal on purchases or balance transfers (or both).
Shift existing debt from multiple cards to one single card, to benefit from a better rate of interest across your lines of credit and make repayments simpler.
Build up a more positive credit rating in the long run. Find out how you can take steps to build your credit score.

What should I ask myself before I switch?

If you’re thinking of switching credit cards, it’s worth asking yourself the following questions before taking the plunge:

Is there a balance transfer fee? Often, credit cards charge a one-off fee for moving your outstanding debt from one card to a zero interest balance transfer card. This is typically worked out as a percentage of the amount transferred.
What’s the credit limit? You’ll need to make sure you don’t exceed the limit on your card. For example, if you’re looking to transfer a balance, you can’t move £1,500 of debt from an old credit card to a new card with a limit of £1,200.
Can I make my payments on time? It’s important that you’re able to pay off your credit card balance in full each month, or at least meet the minimum repayment. And if you choose a 0% promotional deal, make sure you’ll be able to clear the balance before the deal expires and a high rate of interest kicks in.
Is a new card the right option? Switching is only a good idea if it improves your financial situation, so don’t jump in without doing your sums first. You may want to consider other types of credit like a personal loan or overdraft as an alternative to a new card.

When should I avoid switching credit cards?

Every credit application you make will temporarily lower your credit score, so it’s not a good idea to make too many applications in a short space of time. If you’re planning to apply for a mortgage or loan in the next 12 months, it might be best to hold off from switching credit cards for the time being so you don’t hurt your credit score.

It's also advisable not to change your credit card too often. Lenders are reassured by well-managed, longstanding accounts.

Seven stages for changing your credit card

If you do decide to switch credit cards, follow these steps:

1. Decide what you want the card for

Firstly, think about why you want to switch your card. For example, is it to take advantage of an introductory offer, or is it to consolidate your debts? It may help to look at the types of credit card we compare so you can narrow down your options.

Compare the Market Limited acts as a credit broker, not a lender. To apply you must be a UK resident and aged 18 or over. Credit is subject to status and eligibility.

2. Check your credit score

Having a good credit rating will help to increase your chances of being accepted for the most competitive deals. So, see if there’s anything you can do to improve your credit score before you apply.

There are three main credit reference agencies in the UK that offer free credit score checks. They are Experian, Equifax and TransUnion. If you spot any errors on your report, try to get them fixed as soon as you can. To do this, contact the credit reference agency and also talk to the lender who provided the information you’re disputing.

3. Check your eligibility

Once you know which type of credit card you’d like to apply for, it’s a good idea to use our eligibility checker. This will show you the cards you’re most likely to be accepted for, without affecting your credit score. Then you can compare interest rates, as well as any rewards or other benefits, to find the right card for you.

4. Be aware of APR

A key factor in choosing a card could be the APR, or annual percentage rate that you’re offered. APR is what borrowing will cost you each year, including interest and any charges.

The ‘representative APRs’ you see advertised must be available to at least 51% of successful applicants, but it might not be the rate you’ll get. You’ll only know what that is when you apply.

Remember, special introductory rates will expire after the promotional period ends.

5. Apply for your card

When you’ve found a card that’s right for your needs, you can go ahead with your application. If you compare with us, you’ll be taken straight to the provider’s website with the click of a button.

6. Activate your new card

Once you’re approved for your new plastic, you’ll have to wait for it to be delivered, but it shouldn’t take longer than 10 working days. When it arrives, simply follow the set-up instructions. You can usually activate your card via online banking, phoning the card provider directly or in branch.

You might also like to set up a direct debit to make sure you don’t miss a payment.

If you’re transferring a balance from an existing credit card(s) to your new one, you’ll normally be asked to provide details at the application stage. Once your new card has been activated, your provider will usually complete the transfer on your behalf.

7. Think about what to do with your old card

Now you have your new card, you’ll need to decide whether to cancel your old card.

Closing your old card will reduce the risk of identity fraud, and you won’t be tempted to spend on it again. But it also means that your credit score could suffer a temporary dip, especially if your old card had been managed well over a long period of time.

Also, if you’ve switched to a new card with a lower credit limit, your credit utilisation ratio might increase. In a nutshell, this is the portion of credit you’re using out of the total credit limit available to you. It’s important because having less spare credit could lower your credit score. So, it’s worth bearing this in mind, particularly if your credit score is low.