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Friday, December 13, 2013

How to switch credit cards when obstacles for new credit cards arise

Reduce credit card management problems and lower costs via credit card transfes
Balance transfers help lower interest
By Claire Moylan

Switching a credit card can be as simple as finding a new lender and then applying for the card and being approved. That is the simplest case and doesn't always happen.

Do you know how to switch credit cards when your balance is too high to transfer to a new card with a lower limit? What happens when you just don't qualify for a new credit card?

These are just a few of the obstacles people encounter when trying to switch credit cards. There may be more than one hurdle to successfully switch a card and you need to be ready to jump those obstacles so as not to derail your application.

Balance transfers

Sometimes, your old card has a balance on it that you want to switch to a new card to take advantage of a lower interest rate. However, if your new lender says that the new card has a lower limit than the amount on the balance transfer, you may not be able to move the entire sum over. You can ask your new lender to raise the limit and see if that works. If it doesn't, you may need to try to get two cards with a lower interest rate and transfer half on each card. Then, close out the old card.

Not a current customer

Some of the better credit card offers are with banks that require that you be an existing customer in good standing. If you don't have an account with them, you won't be approved for the credit card. The solution is to get an account with these banks before you try to apply for a card. Make sure the account is in good standing before you make your application. To make sure it goes smoothly check out any of their published guidelines on how to switch current account.

You're already a customer of their group

Other lenders may decide to not give you a different card because you already have a card with them or a member of their banking group. These are typically a lot harder to spot and you may end up being denied without even knowing the reason. If you do get denied, you can ask for the reason and then they might tell you. In which case, you can go to the other bank or lender and close the account in order to be accepted for the new credit card offer.

You don't make enough to qualify

Lenders may deny you a credit card if you don't make the minimum amount of income they desire. If you have other sources of income you can include that you can prove and did not list on your application, they might change their minds. However, it's usually pretty hard to get around the income requirements. A better way to get around a denial over income minimums is to find a card that fits your income profile. It may cost you more in some fashion, like interest rates or annual fee, but at least you have the option to switch.

Don't apply too many times

It may be frustrating to have to wait for an acceptance and then end up being denied. However, it's better to apply only a few times over the course of the year than to deluge lenders with applications for credit at the same time in the hopes that one of them will say 'yes'. Not only will it ruin your credit rating to apply to too many cards at once, but it will also scare future lenders who will think you're in a mad dash for cash over spending problems. They won't want to get stuck with the bill, so they'll deny your application even if you meet all the requirements on the basis of your behaviour alone.

When it comes to applying for credit, slow and steady really does win the race. If your application is solid and you are confident enough to wait for their reply without freaking over a potential denial, you will have a better chance of being accepted. Even if a denial shows up, don't let it be the last word. Call them up and ask why the application was denied and you may still be able to wriggle your way into the card if the answer is something simple to fix.

About the author: Claire Moylan appreciates that many people don’t realise the benefits they are missing out on by not switching their accounts more regularly. To learn more about how easy it is to switch accounts check out the free information on the uSwitch.com website.

Image license: 401(K) 2012, CC BY-SA 2.0