Switching Credit Cards | The Dos and Don’ts (2024)

Why switch credit cards

Switching from one credit card to another can be a sensible way of managing and improving your finances.

One of the reasons people switch credit cards is to take advantage of promotional interest rates:

• Balance transfer credit cards typically offer a 0% interest rate for a set period of time, when you move debt onto it from your existing card(s). This usually means you’ll save money, since, during the promotional period, you won't be charged interest on your balance.
• Purchase credit cards often charge low or no interest rates on purchases made on the card. The purchases can usually be made either in store or online. Again, the low interest rate is usually only for a set promotional period – after that, you’ll have to pay the standard rate.
• Dual credit cards can offer the advantages of both balance transfer and purchase cards, but in a single card.

Another common reason to change your credit card is to consolidate debt – this means moving debt from multiple cards to just one. This can help you see how much you owe at a glance, and it can make budgeting and repayments simpler.

So, a credit card switch can be appealing for a variety of reasons. However, there are a few things to keep in mind before making the leap:

• Balance transfer fee. You may be charged for moving your outstanding debt from one credit card to another. Check the terms and conditions of your new card to be sure.
• Transfer limits. You can only transfer a balance that’s within the credit limit of the new card. For example, you couldn’t transfer £2,000 of debt from an old card to a new card with a limit of £1,500.

Do’s for switching credit cards

• Do the math. The point of changing credit cards is to improve your financial situation – so work out the pros and cons of switching, versus staying where you are
• Do consider other types of credit. It may be that a personal loan or overdraft would suit you better than a new credit card
• Do be aware that every credit application you make will temporarily lower your credit score
• Do try and pay off the card before the promotional period ends, and meet all minimum payments on time and in full. Otherwise, you may have to pay standard interest rates

Don’ts for switching credit cards

• Don’t change your credit card too often. This can be costly, as there are often fees to pay when you switch. What’s more, chopping and changing your accounts doesn’t look good on your credit report – lenders typically prefer to see mature, well-managed accounts, as this indicates you’re a reliable borrower
• Don’t make too many applications in a short space of time. This could lower your credit score, meaning you’ll be less likely to get approved
• Don’t forget about your old credit cards, as this could put you at risk of identity fraud and theft