How to switch to a new credit card from the same bank

This may seem like the perfect solution to a number of credit card dilemmas: Switching to another card from the same issuer.

By keeping your card issuer and switching to a different card, you can go for something with better – or simpler – rewards, a higher (or lower) line of credit, or a higher interest rate. low.

In some cases, keeping the same issuer means no claims and – even better – no credit checks, which means no impact on your score. “It can have real benefits,” says Joe Ridout, spokesperson for Consumer Action.

One very practical reason cardholders are switching is to exchange a card with an impending annual fee for a card with no annual fee, he says.

Here are eight questions you should ask your issuer before switching cards, along with the basic rules of major issuers for switching cards:

See related: How to switch from a retail store card to a regular card

1. Will the issuer perform a credit check?

A big advantage to stay with the same transmitter: the company might not make a “Difficult” credit check.

If you select a different card than your current card issuer, some companies will not check your credit at all. Others will make a soft check, which will not affect your score.

But with some card switches (and some issuers) there will be a “hard” credit check.

It came as no surprise to Bruce McClary when he changed cards and the issuer withdrew his credit. “Because I was looking to change my credit limit,” says McClary, who is also vice president of public relations for the National Foundation for Credit Counseling.

When asking your issuer to change cards, ask someone “closer to the underwriting process” to make sure that person knows the answer, such as a senior accounts representative, advises McClary.

It’s also a good idea not to change your card if you’re less than a year away from a big purchase, like a house or a car. Because, depending on your score, a few points could make the difference in the hundreds or thousands over the life of your loan.

2. Are there different rules for different cards?

Some card issuers will allow you to switch cards within the same card family without a request or credit check.

But if you want to switch to or from one of the issuer’s co-branded cards, or if you decide to switch card families, you may need to submit an application and do a credit check, as if you never had been. a customer.

If your goal is to simplify paperwork or switch cards without a rigorous credit check, ask exactly which card from the issuer (if any) will qualify.

3. Will I be eligible for a signup bonus?

Technically, you are not a new customer. So most card issuers will not offer you these new customer sign-up bonuses.

However, some cards will reward certain card changers with a special bonus as an incentive to switch cards, Ridout says. Ask your issuer if you are eligible for a bonus by redeeming.

“I certainly wouldn’t expect any bonus offers,” says Ridout. “It’s more about what [new] the card will do for you. “

4. Keep an eye on your credit score

You don’t want to switch to a new card if your credit and credit score are in a less than stellar form as this could impact the APR you will receive there.

This is especially important if the company does a rigorous credit check. If so, it might be worth the wait until you have time to increase your score.

To change cards, many issuers will also require your account to be in good standing. If you’re late or about to have that balance sent to collections, a switch probably isn’t in the cards for you.

5. How will old and new cards be reported to the credit bureaus?

the average age of your accounts and the length of your credit history are also important factors in credit scoring – hint: more is always better.

Therefore, think twice before replacing the oldest card in your wallet.

In order to understand how the change could impact your credit, be sure to ask the following questions of your issuer:

• So the new card will show up as a new “business line” on your credit report.
• If your credit history will show the age of the account like that of the new or old card.

As long as the change doesn’t affect the length of your credit history, you should be fine.

6. How could the swap affect my utilization ratios?

If the new card comes with a different credit limit, it could potentially benefit or harm your credit as it will impact your credit usage.

Credit usage – how much you borrowed against your credit limits – is the second most important factor in credit rating calculations, after making payments on time.

Credit scoring formulas look at your usage ratios on individual cards as well as the overall usage of all of your accounts combined.

If the new card you will receive after the change has the same credit limit, your usage will remain the same. If it comes with a higher limit, it will reduce your usage and potentially increase your score. But if the credit limit is lower, your usage will increase – and it could lower your score.

See linked: Credit Usage: How This Key Scoring Factor Works

7. What happens to existing rewards?

If you’ve spent five years collecting points to fund that trip to Timbuktu, you don’t want to lose them just because you change cards the day before your trip.

Find your rewards balance and include those points or miles in your conversation with the sender. Find out if you could lose some or all of them if you switch, and what steps you can take to protect them.

8. Do I have to buy other transmitters?

It’s a good idea to shop around for all of your options before switching cards, especially if you still need to reapply or if your current issuer is going to withdraw your credit.

Even though you can get the new card without a credit check or additional paperwork, “it’s always worth looking at what’s else,” McClary says. “Also look at some of the competitive offers from other lenders.”