Knowing When to Switch Credit Cards

When credit cards are used properly and the credit score is maintained it is possible to enjoy years of financial benefits. After having the same credit card for several years it can be difficult to part ways when the interest rate rises and debt begins to accumulate.

Knowing when to switch credit cards is a very important step in preventing unnecessary debt caused by exorbitant rates and unexpected fees. The following information can help anyone decide when it is time to look for a new credit card.

Stubborn Late Fees

Late fees are the teacher’s pet of the credit card industry, and their prime breadwinner other than the interest itself. Cardholders that are experiencing stubborn late fees may find that their credit card company is processing payments slower than usual. Unfortunately, it does not matter when the payment is issued, but rather when it is processed and posted to the account by the credit card company. After three months of sending bills in on time, if there are still late fees appearing on the monthly statement then it may be time to switch to a new credit card.

Unstable or Rising Interest Rates

Some credit cards come with fixed interest rates that are supposed to be quite steady. However, this is not always the case. Fixed interest rates can change with a two week warning. A cardholder experiencing fluctuating interest rates should immediately seek an explanation or seek a new credit card. If the interest rates are rising due to the cardholder’s credit score then it is not the fault of the credit card company.

How to Switch Cards Without Damaging Credit

Switching credit cards is not as simple as simply picking a new card and discarding the old one, especially if there is an outstanding balance on the current card. Outstanding balances that are left unpaid will continue to accumulate debt, so it is very important that these balances are paid before the card is abandoned. In some cases it is possible to transfer the balance to the new card without paying a balance transfer fee. Credit card accounts that have been open for a long time are more likely to have a substantial impact on the credit score when they are closed. In order to keep the debt-to-credit ratio in balance it is best to ensure there is an adequate amount of total credit available before canceling any credit account.