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.

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.

Anelda Knoesen
From the Money team
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Posted 8 JANUARY 2020

Why might I want to change credit cards?

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

Take advantage of rewards from spending, such as cashback. 

Shift existing debt from one card to another, in order to benefit from a better rate of interest across your lines of credit. 

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 decide to switch, it’s worth asking yourself the following questions:

  • Is there a balance transfer fee? Often, credit cards charge a one-off fee for moving your outstanding debt from one card to another. 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, then you couldn’t move £1,500 of debt from an old credit card to a new card with a limit of £1,200. You’re unlikely to find out what limit you will be given until you actually apply though, so it may be worth checking your credit score before making an application.
  • Can I make all of my payments on time? It’s very important you are able to repay your credit card debt in full, or at least meet the set monthly minimum on your statement each month. And don’t forget to check your credit card statement regularly, so that you are sensitive to any fraudulent activity on your account.

5 stages for changing your credit card

1. Work out what you want  

Once you’ve worked out a budget and a plan for meeting your minimum payments each month (or paying off your balance in full) then it’s time to find out which credit card will work for you. Compare the seven main types of credit card we offer and compare deals.

2. Shop around and compare

Compare credit cards from a wide range of providers with Compare the Market. The interest rates you’re offered, as well as any rewards or other benefits, could vary a great deal so it’s only a good thing to start a full comparison.  

Also, be careful not to be drawn in by cards offering tempting introductory rates as these will expire and you’ll need to have factored this in when you work out your budget. Find all of our credit card providers.

3. Apply for a credit card, but be aware of APR first

A key factor in choosing a card that works for you could be the APR, or annual percentage rate which you are offered. APR is what your borrowing will cost you each year, including interest and any charges. This will be a factor if you think you’re likely to keep the card after any introductory rate has expired.

4. Set up direct debits and standing orders on your new card

Once you are approved for your new plastic, you’ll have to wait for it to be delivered. Once it arrives the set up procedure will vary e.g. you may need to call the bank to activate but it will be pretty straight forward. Once you have your card you might need to then request the balance transfer from your old card and also set up and direct debits from your old card on your new card to cover things like bills or subscription payments. Don’t forget to close your old card and/or cancel all of these direct debits.

5. Double check that you have cancelled (or transferred) any direct debits on your former card 

Remember to check which standing orders and direct debits are scheduled to be paid from your new card, so that you don’t pay twice for any bills or other payments. And finally, don’t forget that any possible benefits you hope to get from a credit card will be overshadowed by the cost to you if you’ve unable (or forget) to repay at least the minimum monthly fee – and ideally more each time you get a credit card statement.

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