Not happy with your current credit card? With numerous credit card companies vying for consumer attention, you can opt for one that offers more favourable terms.
When should you consider switching credit cards?
Sometimes, we can get so used to using the same credit card that we don’t compare offers and rates with other credit card companies. It’s a good idea to scout the market every now and then to see that you are taking advantage of the best deals.
Here are some valid reasons to switch your credit card:
1. Your company charges higher rates of interest: The difference in amount may be seemingly nominal but it can make a sizable difference to the amount that you need to pay back. Sit down and do the calculation.
2. Your credit card company has a smaller grace period: Every credit card company offers a grace period during which you pay zero percent interest. If your provider’s grace window is less than its competitors, it could be time to switch.
3. Poor customer service: Are you kept on hold endlessly or do you get a prompt, courteous response? If the customer service is poor, take your business to a provider worthy of your hard-earned money.
Transfer your balance to a new card with a lower interest rate
If you owe your current credit card provider say £3000 and you find another provider who is offering a lower rate, you are allowed to process what is called a ‘balance transfer’. This simply means that you will now owe your new company the same amount.
The benefit is that if the interest rate is lower, then you can pay off your credit card debt faster and with lower repayment amounts. There are a couple of important things about balance transfers that you need to remember:
- Balance transfers usually attract an additional fee. The rate is usually between 3 to 5% of the transaction amount
- The process usually takes about 1 to 2 weeks
- You can only transfer an amount that is below your credit card limit. For example, if your credit card limit is £5000, then you can only transfer an amount of upto £5000.
If you owe multiple debts to creditors, then you can consider transferring all your outstanding balances into one credit card. You can avail of any introductory offers of lower interest rates, enabling you to pay off the balance quicker especially if you can transfer to a new card which offers 0% interest for a period of time.
Don’t forget to close your account with the old credit card provider and don’t, whatever you do, continue to spend on your old cards.