Sunday, November 4, 2007

What You Should Know About Switching Credit Cards

Switching credit cards has never been simpler; today switching a credit card is like switching the batteries in your remote. The sudden surge in people frequently switching credit cards has been bought on by the lowering of APR (Annual percentage rate, or to put it simply interest rates) and by the ease with which people can carry out balance transfer. In fact more and more people have started switching credit cards on a regular basis to avoid hefty APR and to get a better deal on the credit card itself. Incidentally, once an individual has isolated a particular card that suits his needs, more often than not the person does switch over from this existing credit card to the newer credit card

Before you go ahead and switch your credit card, or transfer your balance from once credit card to another there are a few things that have to be kept in mind. The first thing to remember is that every time you apply for a new credit card, a fresh credit check is run on your credit score, so if you have had a poor credit score in the past, or are not confident that you have a decent credit rating at the moment, you should avoid trying to go for a new credit card. On the positive side of things, today it’s easier to get a credit card than it ever has been, and more and more people have found that they are eligible for credit cards they thought they would never get.

Once you are confident that you want to apply for a new credit card, the next step is to isolate the credit card that you want, as mentioned earlier the most pivotal factor while switching credit cards is to keep in mind the APR that is applicable, if you are considering balance transfer from one credit card to the other, then you should make sure that you have clearly understood the duration of the zero APR period, or the processing charges that are applicable.

For example if you have a debt of around $1000 on the current card still outstanding, and the new card is offering you 0% APR for the first six months, then transfer over the amount from your existing credit card only if you are confident of paying off the $1000 within the 0% APR period, otherwise all you will do is save on interest for 6 months which may not be even worth the trouble. However the new credit card might actually have a lower overall APR when compared to your current credit card, then carry out the balance transfer without a moment’s hesitation it is a win-win situation for you.

A vast majority of credit card users only switch from one credit card to the other, so that they can pay a lower interest rate than they are already paying. The vital aspect to remember is to clearly comprehend the terms and conditions of the new credit card, so that you grasp clearly if it’s worth switching over form one card to the other.

Switching credit cards is a great way to make savings on both the APR you are paying, as well as getting the best deal that the market has to offer. In fact many smart shoppers switch over credit cards just to save on large purchases that might have cost them a lot of money in terms of Interest. By actually switching credit say once a year, a person can effectively pay off a large debt without having to pay any interest at all! A word of caution here though, do so only if you clearly understand the charges involved, and also have a fairly good idea of the duration of the 0% APR, or else you might just end up getting yourself into bit of a jumble, without realising it.

Irrespective of the purpose of switching a credit card, its always advisable to first read the terms and conditions of both the credit cards involved, as there might be charges that are applicable from both credit card companies, once you are confident that you are in full control of the proceedings, go ahead an switch cards, it is a great way to make savings without having to cut corners, or be part of lengthy paperwork.

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