Changing credit cards: How to switch to a new one
Switch your credit card over to a new and improved one in a few simple steps, anytime you want.
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Switching your credit card can be done at any time, for any reason. Whether you're looking for a specific rewards program, want to take advantage of some promotional offer or simply want a credit card that suits you better, you can open up a new credit card account and transfer your old one.
While you can't magic away existing debt in the transfer, here are the questions you should consider when you're looking to switch credit cards.
How do I change credit cards?
These steps will help guide you through the process of changing cards:
- Compare credit cards to find one that suits your needs. With so many credit cards on offer, a good place to start is thinking about what you want from a credit card and look at the different options. You can also use the features on your current card as a point of reference so that your next card offers rates, fees and benefits that work better for you.
- Apply for the credit card. Make sure that you satisfy the card's eligibility requirements, and then apply. Applications are mostly done online and usually take around 10-15 minutes.
- Transfer the debt on your old card (if you have existing debt). Call your current credit card provider and ask for your entire outstanding balance for closing the account. This will help ensure you are transferring the full balance and don't get stuck with a small amount owing on the old account. If you're unsure about the balance transfer process, we have a guide here.
- Wait for approval, then activate your new card. Online applications can be approved in as little as one minute. Your new card may take up to two weeks to arrive. When it does, activate it by following the instructions provided with the card.
- Settle the balance on your old account and close it. This avoids any potential extra charges on the account, e.g. annual fees, and means you have one less account to keep track of. If you have requested a balance transfer, wait for your existing debt to be moved to your new card (this process is managed by the new provider). If not, you'll need to pay off the account's entire balance before you can close it. Either way, make sure you check with your old provider that there are no outstanding charges, then cancel the account over the phone or online.
Can I switch to a different credit card with my bank?
Most banks offer customers the option to switch to a different credit card. Depending on your situation and what card you have, you may be able to make the switch online through your bank's website or online banking tools. Otherwise, ring up your bank and see what you need to do to switch.
Can I upgrade my credit card?
If you're eligible for a card upgrade, your bank may send you a notification letting you know, although you may need to have subscribed to promotional offers to get these. You can always contact your bank to see what upgrade options might be available to you.
Questions to ask before changing credit cards
- What do I want from a credit card? Decide what matters most to you in a credit card: low annual fees, rewards, low interest rate on purchases, or something else.
- How much credit do I need? The maximum credit limit available to you is based on what you could afford to pay off over a three-year period, taking into account any existing debt (e.g. other credit cards, loans). This may result in a lower credit limit than you currently have, though you might be able to increase it in future. Here's a short guide on picking a responsible credit limit.
- When is my annual fee due? If you can switch and cancel your credit card account before your annual fee is due, you won't have to pay it.
- When is my next payment due? If you're moving debt to a new card, be aware the balance transfer will take a couple of weeks to be processed. If a payment is due in that time, you'll need to make it to avoid extra charges on the account you want to close.
- What is my credit score? Your credit score is used by financial institutions as a measure of your risk as a borrower. Your credit score will be higher if you make repayments on time, don't max out your credit limit and follow other responsible borrowing practices. Applying for more than one credit card at a time can hurt your credit score and make it harder to get approval for any of them, so pursue a single application at a time.
How do I transfer direct debits over to my new credit card?
If you have direct debit payments set up on your old credit card, you'll need to transfer them over before cancelling your old card. Otherwise, closing the account will result in declined payments, which could attract penalties or dishonour fees. Here are a couple of steps you can take to help you sort out the transfer.
- Get a list of ongoing payments or recurring subscriptions. The easiest way to do this is looking at your credit card statements for the past 12 months. Any ongoing direct debits or subscription fees should appear in that time frame.
- Update your payment details. For each direct debit, contact the company or hop online to update your details to your new credit card. This could be a good opportunity to cut out unnecessary subscriptions you might not remember you had.
- Follow up. Take a quick look at your statements for the next month or two to make sure that the change has gone through and that you're being charged correctly.
In the end, being happy with your credit card is the most important thing. If you're having problems or are unhappy, switching or cancelling the account can help you save money and save stress.
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