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But the burning question is:
Which ones to stick to and which ones to discard?
Ask yourself, that if there are changes in your needs and lifestyle, then, are the credit cards you are holding still making sense? Are these cards still suitable for you?
Let’s find answers to these questions. Here are some of the reasons why you should switch your credit card.
Is a huge amount of annual fee coming due on your credit card soon? Keep in mind, this could be an appropriate time for reviewing the value of your credit card for deciding if you should continue with your current card or close its account. Compare credit cards UAE and determine if the benefits you are getting from your credit card outweigh the cost.
For instance, you may own a credit card that is co-branded with an airline that costs around AED 400 annually. You can enjoy the benefit of the free checked bag when flying on the tickets bought through this card. In case you & your travel companion fly a round-trip every year on this airline, you get to avail 4 free checked bags. The airlines usually charge for every checked bag. Through this credit card, you are able to save on this fee.
In simple words, put the dirham value on the benefits offered by your card and analyze how many of these features you would be using. Figure out the hard costs you would incur in case you do not have a credit card.
In case the fee is the larger number and there are changes in your lifestyle, you would want to consider whether your credit card is still suitable for you or not. You would wish to switch to some other card or close the existing one. Before doing so, however, it is essential to be aware of the impact of closing a credit card.
There are several credit cards available, which do not charge any annual fees, especially from those customers whose credit score range from good to great.
Keep in mind, that the credit card providers consider many factors, including your credit rating, for determining whether or not to approve your credit card application. They also consider these factors for deciding their terms on the offer.
Since there are plenty of reward cards available in the market of the UAE for the customers at each level on the credit ladder, using a credit card, which does not offer anything in return is absolutely useless. The rewards you can earn on credit cards are in the form of points, miles, cash back, and even the statement credit towards the bill of your credit card.
In case you are able to earn rewards on your card, but they are not easy to redeem, you might consider switching to another credit card. There are various cards that have a flat-rate earning option for all the purchases you make. This, in turn, saves you from the effort of keeping up with spending tiers or rotating categories.
In case you are carrying a balance but you do have other cards, which are carrying lower rates of interest, you may want to close the credit card with the higher rate of interest after transferring the balance.
There are a huge number of 0% APR balance transfer introductory offers available these days. Now, if you have taken advantage of this introductory offer and it is going to expire soon, it is time for you to review your credit cards and balances. After analyzing these, you may feel like dumping the worst in the lot.
However, keep in mind, you may have to bear a fee of a certain percentage of the amount of every balance transfer for transferring each balance.
Moreover, some credit cards may treat balance transfer as cash advances that are generally billed at a higher rate of interest. Hence it is recommended that you go through the terms carefully before moving the balances around.
A portion of your credit rating is based on all of your accounts’ average age. So, even though you never or occasionally use your old card, you may want to continue with it for it age benefits.
In this case, it is advised that you put the card to use once every few months to prevent it from becoming dormant. Some credit card providers may close the accounts that are dormant or levy a fee for inactivity.
However, closing a “new” credit card could actually cause a rise in your credit score by a notch only if there is a higher average age for those accounts you have left open consequently.
Hence, a new card on which the introductory rate is expiring can be the candidate you can consider closing.
If you are in the process of building or in fact rebuilding your credit, there are chances you would have been disqualified for a card for those who have an excellent credit during your first application. You might even hold a secured card.
In case you have paid the bill on your credit card timely for six months and maintained low balances, and managed any other credit account or loan too, your credit rating may have improved enough for qualifying for a traditional card, which is relatively cheaper to hold and offers even more benefits.
Rates of interest and annual fees are not the only factors that affect the entire cost of a credit card. In case you are a frequent traveler and the credit card levies an international transaction fee for the purchases made outside the UAE, search for a credit card, which does not levy an international transaction fee. This will help you in saving this significant expense on your purchases.
You might not wish to close your credit card if this will significantly increase your DBR (Debt Burden Ratio). If you have a balance on your credit card, do not close your account before you transfer the balance to some other account.
If you have such a credit card that you have held for a long duration, you might want to re-think before deciding to close it. This is because your credit history’s length is also a factor affecting the credit score.
The Bottom Line!
As changes occur in your life, your credit cards should keep changing too. The travel card you were using during your college days when you were a globe-trotting grad may not meet your needs after you have settled down with a full-time job, marriage, and have started a family. In this situation, you may prefer a cashback card.
This is the time you would want to switch over to a different credit card. In this article, we have enlisted why and when should you think about switching your credit card. For doing so, you must compare credit cards UAE, and choose the one that is the most suitable for you.