Credit cards are immensely popular in the UK and are used by a lot of people in various day to day transactions. However, one of the main mistakes that I see many users make is failing to shop around for the best credit card deals. Consequently, they end up paying extremely high fees and interest rates for years on end.
As a credit card user, simply shopping around for better credit card deals can save you a fortune every year. It can also help you enjoy greater rewards and benefits, especially if you have a decent credit score. Unfortunately, the process can be confusing since many issuers have a habit of changing their offers frequently.
What follows are some practical steps that I believe can guide you in figuring out whether it is time to switch your credit card.
Review your current credit card’s terms frequently (every 6–12 months) To attract new customers, credit card companies are always coming up with new offers and terms. This is why I advise that you make a habit of reviewing your current credit card’s terms every 6 to 12 months.
You can visit your issuer’s website to see whether they have introduced new terms or offers for new customers. You can then compare them with the terms on your current card and if they seem better, switching to the card with the better terms might perhaps be a good idea.
An alternative course of action to switching your card would be to contact the issuer and request a new or improved deal. Since the company wants to retain you as a customer, there is a likelihood that they will be willing to improve your current deal in some way. For example, they may offer you extra rewards or an adjustment of your annual fee.
However, if the company is not willing to negotiate your current deal, you can always make a switch to the better card.
Regularly compare offers from your issuer’s competition Several sites on the internet such as My Wallet Hero allow you to search for the best credit card deals on the market from competing issuers. They also provide you with information on prevailing interest rates, fees and terms. You might come across a deal that seems too good to pass and therefore make the decision to switch your current card.
Additionally, apart from helping you decide whether it’s time to switch your card, regularly visiting these sites and noting down great deals can give you great leverage when dealing with your company or even with other issuers. You can use the information to renegotiate your current deal with your issuer and potentially get an improved one.
Know your personal goals, needs and interests Your financial goals, needs and interests (which change with time) ought to be fulfilled or accommodated by your credit card and if this is not happening, then perhaps it might be time to switch.
For example, if you usually carry balances and you feel like they are beginning to overwhelm you, then you’ll most likely want an introductory rate like the one offered by 0% balance transfer cards. If you repay your entire balances every month, then it would make perfect sense to switch to a card with added perks such as rewards or lower fees.
Key takeaway Regualrly shopping around for a better credit card deal can save you a fortune every year in addition to many other benefits.
To decide whether it is time to switch your current card, review its terms frequently, regularly compare offers from your issuer’s competition and finally, know your personal goals, needs and interests and see whether your current card is consistent with them.
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Motley Fool UK 2019