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How to Switch Credit Cards

Fiona Leake
Fiona Leake
  | Edited by Fiona Leake
Updated 4th February 2021

Have you thought about switching credit cards? This can be a great way to manage your finances but making the switch requires planning and consideration. Whether you are hoping to switch credit cards to a lower interest rate or within the same bank, our guide is here to help make the process as simple as possible.

Why switch credit cards?

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Switching credit cards can be a great way to manage and potentially improve your finances. You can take advantage of a better card on offer or use the switch to pay off your debts.

Three of the main reasons you might want to switch are:

  1. Better rewards - you might switch credit cards to one that offers more rewards such as cashback or airmiles
  2. Lower interest rates - if you are being charged a lot of interest on your card, you might consider switching to one that charges less.
  3. Repay debt faster - switching your regular credit card for a 0% balance transfer card will allow you to shift the original high-interest debt onto a new card. This card will charge 0% interest for a set period of time. Focus on paying your debt faster, without added interest.

Should I switch credit cards?

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Deciding whether to switch credit cards depends on your situation. However, there are some things to consider before switching cards. It’s important to have a plan in place beforehand and knowing these things can help you to formulate that plan.

1. How it might affect your credit score

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  • Credit limit - if you switch cards to one with a larger credit limit, your credit score could increase. This is because your credit utilisation will be lower. Credit utilisation is the amount of credit you owe vs your credit limit. Lenders like to see credit utilisation below 25%. So, if your new card has a higher limit of £4,000 and your balance is £500, your credit utilisation will only be 12.5%. If your old card had a limit of  £2,000, you would have been using 25%.
  • Credit age - the length of your credit history makes up 15% of your overall credit score, so it’s pretty important! If you swap an old credit card for a new one, your credit history could decrease along with your score. However, you can ask your credit card provider to count the two switched cards as one account. This wouldn’t affect your credit history. You can only ask this if you are switching within the same bank.
  • Credit search - some banks will switch your credit cards without doing a ‘hard search’. Hard searches appear on your credit history and can lower your score. However, sometimes banks will still carry out a ‘hard search’ if you are switching cards.

2. Plan ahead for 0% interest offers

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Your new credit card might come with 0% interest on purchases or balance transfers. But this offer won’t last forever and the standard interest rate will kick in once the introductory period ends.

Plan ahead to make sure that you can clear your balance before the end of the period so you make the most of switching cards.

Set up a direct debit to pay back the money every month and set multiple calendar reminders so you don’t forget!

3. Ask what happens to credit card rewards

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If you are switching from one cashback card to another, you should be able to keep the cash you earnt on your old card and switch it to the new one. However, if you are switching from cashback to airmiles, for example, you should ask your provider what will happen to the rewards.

Always check what will happen to your rewards before making the switch. In some cases, you might lose them entirely, so carefully consider this before changing cards.

4. Ask yourself these questions before you switch

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Before deciding to make the switch from one credit card to another, consider the following questions:

  • Is there a balance transfer fee? If you are switching credit cards to shift high-interest debt onto a 0% balance transfer card, check if you will be charged a fee for making this transfer. Balance transfer fees are often worked out as a percentage of the balance transfer, meaning this can add to your debt. For example, if you want to transfer £2,000 to a new card with a balance transfer fee of 5%, you would end up owing £2,100 on the new card.
  • What’s the credit limit? Make sure the credit limit is higher on the new card, this will reduce your credit utilisation ratio. You also don’t want to transfer your old balance onto a new card with a limit lower than the total balance. If you exceed your credit limit, you will be charged a fee.
  • Will I be able to pay it back? You should aim to completely pay off your credit card each month. However, if you are transferring a lot of debt, make sure that you can afford to pay it back before the 0% interest period ends. 
  • Are the rewards worth it? If you are switching your standard credit card for one with rewards, make sure it’s worth it. Rewards cards tend to charge an annual fee and high-interest rates. Make sure the rewards suit your everyday spending and you’ll benefit from using them.

5. Ask your bank these questions before you switch

There are also a few questions you should ask your bank before you decide to switch credit cards. These questions are aimed at your existing provider and potential new provider.

  • Can I get a better deal? Ask your existing provider if they can offer more rewards, no annual fee or lower interest rates before you switch. They will want to retain you as a customer and might be able to improve your existing credit card.
  • What will my credit limit be? Aim for a higher credit limit when switching.
  • What interest rate will I have on the new card? If you are switching credit cards, don’t pay more interest than you were before!
  • Will the switch involve a ‘hard search’? Hard credit searches will appear on your credit history and can lower your score. If a hard search is required, always use an eligibility checker beforehand to help determine whether or not you should apply.
  • What about existing credit card rewards? You’ll want the rewards to switch to the new card, find out what will happen to them.
  • Will my balance transfer when I switch?
  • Will I get any sign-up bonuses? If you are switching cards within the same bank, you might not receive the same bonuses that new customers do.

How do I switch credit cards?

Follow our step-by-step instructions to help make switching credit cards an easy, stress-free process.

1. Decide what card you want to switch to

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Why do you want to switch credit cards? Do you have a lot of credit card debt? Then a balance transfer card could be a good switch.

Or, have you improved your credit score and are now looking for a more rewarding card? Then rewards, cashback or airmiles card might be better for you.

You can take a look at our best credit cards to learn about the different types of card and which is the best in each category.

2. Use an eligibility checker first

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Compare cards and narrow down your search. You can then use the eligibility checkers on the card provider’s website. These checkers indicate how likely you are to be accepted for each card.

Only apply to cards that you are likely to be accepted for. Do not apply for credit cards where the eligibility checker says you’re unlikely to be accepted. Only apply to one credit card.

3. Apply for your new card BUT ask questions

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Once you’ve decided on one card, make sure you ask the questions we’ve mentioned previously to your bank. You want to make sure that you are switching to the best possible card that’s an improvement on your old one. 

You can then go ahead and apply either online, by post, by phone or in-store at your nearest branch. Remember to have done an eligibility check first (see above)!

Credit card applications can take just minutes to approve. Once you’ve been approved, your new card should arrive in around ten days.

4. Set up direct debits on your new card

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Direct debits or standing orders that you had on your old credit card will now need to be set up on the new one. Also, make sure that you set up a direct debit from your bank account to pay off your new credit card bill every month.

Cancel any direct debits or standing orders on your old card once they are set up on the new one.

5. Decide what to do with your old credit card

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Now that you’ve made the switch, you need to decide whether to close or keep your old credit card. If your old credit card charges an annual fee, it might be worth closing it as you are no longer using it. 

However, if there are no fees associated with your old credit card, you could keep it open. Having a long, well-managed credit history can improve your score.

Switching credit cards do’s and don’ts

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There are a few things you should and shouldn’t do when switching credit cards. Remember, you want to switch to a card that will improve your finances, so keep this in mind when applying.

Do’s

  • Do figure out the math - the main reason people switch credit cards is to improve their finances. Make sure your new card doesn’t charge an annual fee, has lower interest rates, offers 0% interest periods or offers more rewards.
  • Do consider other options - you might not need a new credit card if you are looking to borrow money. A personal loan might suit you better.
  • Do clear your balance before the offer ends - if you are switching credit cards to a 0% purchase or balance transfer card, make sure you can afford to clear your balance before normal interest rates are added. You can work this out before applying. If you can’t clear your balance, switching cards might not be worth it.

Don’ts

  • Don’t switch credit cards too often - constantly changing credit cards won’t look good on your credit report. Lenders like to see a consistent, long, well-managed credit history as it proves you are reliable. 
  • Don’t apply for too many cards - if you apply for multiple new credit cards, your credit score could be damaged. You might appear to be desperate for money and struggling financially.
  • Don’t forget to switch direct debits - any direct debits or standing orders you’ve got on your old credit card need to be set up on the new one. Remember to cancel the old ones!
  • Don’t forget about your old credit card - if you keep your old card open, don’t forget about it and accidentally use it to make purchases or lose it. Old credit cards can be at risk of fraud.

I can’t meet my minimum credit card payments due to coronavirus. What should I do?

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Coronavirus has put a financial strain on many. If you have a credit card and are struggling to meet your minimum repayments, you may be eligible for help.

The Financial Conduct Authority (FCA) has introduced measures that allow you to request a freeze on credit card repayments for 6 months. However, you may still be charged interest in this period.
You have until the 31st March 2021 to request a freeze but make sure you agree with your lender before stopping repayments. This won’t leave a bad mark on your credit history either due to the exceptional circumstances.

If you can afford to keep paying, it’s best to do so as you will still be charged interest during this holiday period.

All payment holidays must end by 31st July 2021.

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