When faced with an option of keeping an existing credit card account or opening a new one, the default suggestion is to stick with the card you already know. The primary benefit is that accounts have a better impact on your credit score the older they get, if you’re in good standing.
Occasionally, you’ll receive an offer that gives you the option of transferring your existing credit bills to a new account, one offering lower interest. But, before you switch, pause to consider all the consequences. In fact, you might want to discuss it with someone who knows credit well, like a counselor from American Financial Solutions.
Among the things to consider is whether that low rate is one that will continue as the new account ages. Many attractive offers are designed to hook you with the low teaser rate that then jumps to a higher rate months down the road. Do the math first to see how much you would really save. Consult online credit card interest calculators to see exactly whether you will save.
Chances are good that sticking with the old card will, at worst, be just a little more expensive than opening the new account. And that doesn’t factor in what the cost to your credit score is when you close an old account.
Feel free to use that great offer you’ve received as leverage with your current provider. Call your lender and tell them the deal you’ve been offered. If it’s good enough that it really would save you money, be willing to make the switch. More important, though, is to let your current credit card company know that you’re willing to leave them. That could be when they begin sweet talking you.
Credit card companies are often willing to offer retention bonuses, a reward you get for staying with a company for a decent length of time. Those perks are generally not as good as the ones they offer to lure new accounts, but they can be significant. Among the perks credit cards might offer you to stick around are:
To get your annual fee waived it’s often best to call a few months ahead of when the charge will appear. Airline mileage is something for anyone who might travel. Reward points are those you get for the money you spend on the card. You then get to spend those points on some sort of premium. In most cases it’s not a good strategy to spend money on a credit card just to get points, but if you get some just by asking for them there is no reason to not pursue that perk.
In the end, part of being a smart consumer is knowing how to leverage one offer against another. There will be occasions when you may not get the deal you want, but if you never ask for it you definitely won’t get it.