You have a good relationship with your current credit card. You do everything right, whether it’s paying your bills on time or checking your card’s activity regularly. Sometimes, you read the terms and conditions to unearth benefits. But have you stopped for a minute and asked what your credit card is doing for you?
At first, it may seem like a bizarre question to ask yourself. However, you may be missing out on a world of benefits and features offered by other cards because you’re comfortable with this one.
And if you can’t find an answer to the question above, it’s time to end your relationship with the old card and start exploring the market for a new card.
We’ve curated a list of reasons that will push you to sign up for a new plastic card.
#1 Your Credit Score Has Improved
It’s difficult getting the best credit card when you have a bad credit rating. This means you had limited options and had to settle for a card with just basic features. Now that your credit score has improved significantly, banks want your business. You can start looking for cards with better features — low-interest rates, higher reward points, annual fee waivers, and more.
It’s advised to check your score before you get too invested in a card and apply for it. You can check your score online for free and also get your report to see how you can further improve your score. And if it is in the ‘excellent’ territory, you can pick any card in the market.
#2 Your Spending Habits Have Changed
You have a card that offers reward points on petrol expenses. However, now your expenses have increased in the dining category and you’re no longer earning points on your card. If your spending habits aren’t in line with the benefits, it’s time to consider a new card. There’s an array of rewards and cashback cards available, some for specific categories. Some providers also let you change your categories to match your spending habits throughout the year.
You can start by evaluating your spending patterns over the last couple of years and then find a card to match those preferences.
#3 You’re Not Earning Any Rewards
If you have a card that doesn’t offer any rewards or cash back on your purchases, it’s time to make the switch. Most cards have incredible reward programmes that let you earn money while you spend. Some programmes also let you convert your points to air miles, giving you discounted airfares as well as airline related vouchers. Begin by comparing the various rewards other providers are offering and see if your card stacks up.
#4 Your Interest Rates are Higher
If you have been with the same bank for years, you could ask them to consider lowering your interest rates. This would be an ideal approach if you’re carrying a balance on your card. However, if your bank doesn’t lower your rates, you will have to move your balance to your new card. Some providers offer incredible balance transfer programmes and you won’t have to pay interest on this amount.
Before switching to a new card, check around and see what other banks are offering in terms of interest rates. It’s also good to check their respective balance transfer programmes. This will help you make a decision easily.
#5 Your Credit Limit Hasn’t Changed
Your credit limit has stayed the same on your card, despite the increase in your income and an improvement in your credit score. In this case, you can always reach out to your bank and request them for a credit limit increase. However, this application may be rejected depending on your repayment behavior or credit history. If you still don’t get your desired limit, you can start looking for new cards.
#6 You’re Paying an Annual Fee but Not Enjoying Any Benefits
There are two reasons you’re paying an annual fee for your card. One, this was the only card you were eligible for because of a low credit score. Or two, the rewards or cashback you receive is higher than your annual fees. However, if you’re not cashing in those reward points or spending enough to get cash back, you’re shelling out more money than saving.
In this instance, it’s best to switch to a card that has no annual fees. This way, you won’t be burdened with expensive annual fees and you can get a card that meets your requirements.
#7 You Have Your Eye on Sign-up Bonuses
Some cards offer great sign-up bonuses like a surplus of reward points or air miles when you apply for them. Many credit cards also offer bonuses if you spend a certain amount of money within the specified time period. Now, if you want this sign-up bonus, you should also consider the limitations. For instance, you will have to be a new account holder to get certain cards or the sign-up bonus is applicable only when you spend a minimum amount using the card.
Ask yourself if it’s worth the switch and if you’ll get additional benefits should you move to that card. If it checks all the boxes, then go ahead and grab that bonus!
#8 You Have to Buy Something Big and Expensive
So, you bought the latest smartphone and your warranty doesn’t cover the damage. Some credit cards provide purchase protection against accidental damages or theft. However, the benefits of purchase protection differ from provider to provider. The coverage amount, the duration of the coverage, and the exclusions also change, depending on the provider and the card you choose.
#9 Your Current Credit Card is Getting Discontinued
Sometimes, banks decide to discontinue a particular credit card for a number of reasons. You will be informed of this and your provider will also give you the option to choose another card from their portfolio. In this case, you can either pick a card from the same bank or opt for a card from a different bank.
While it is important to switch to a new card, you don’t necessarily have to close your old card. And there’s a good reason for this—the account age helps your credit score. You can continue using your old card periodically to keep it active. However, if the annual fees are burning a hole in your pocket, it makes sense to close the card.
Switching to a new card after many years requires a lot of research as well as market knowledge. That’s why it’s important to take advantage of compare tools.