It is important that you check your spending limit when you plan to upgrade your Credit Card. Read on to know more.
Credit Card is your lifeline when you’re out of cash but yet you want to shop non-stop. Normally, as a beginner, you buy a basic Credit Card with minimum rewards points to help you with your day-to-day expenses. But if you are planning to use more features associated with a Credit Card, you need to upgrade it to enjoy multiple benefits. You can either upgrade your card from the same bank or opt for another one.
In this article, we take a look at few points to keep in mind before going for a Credit Card upgrade.
Check Fees For Upgrading The Card:
Credit Card upgrade brings in a host of features like a higher credit limit and value-adding features such as air mile rewards, rewards programme for shopping and dining out, concierge services, and complimentary insurance. But, there is a cost attached along with, in the form of higher annual fees or interest rates. One who is planning an upgrade is the best judge to do a cost-benefit analysis and then prudently opt for it.
Also, do keep in mind that upgrading the card will give you higher credit limit which in return will give you more purchasing power. This, of course, brings a temptation to shop or spend more. Hence, the need to weigh the pros and cons before going for an upgrade.
Check Terms And Conditions:
Your bank will offer you Credit Card upgrades along with benefits such as 0% service charge on purchases, an interest-free balance transfer period or bonus rewards points, but please take care to check the terms and conditions. This offer might be available to new customers only and not the existing ones. Hence, you need to do a thorough study before going for it.
You should also check whether you are eligible for an upgrade. Some banks may ask for eligibility requirements such as minimum annual income, age restriction, and residential status. Banks might also check your credit history before allowing you to upgrade your card.
Zero Percent Balance Transfer:
You may get tempted to upgrade your card and take advantage of a zero percent balance transfer. This feature allows you to transfer your debt from a particular card to another card with zero percent or low-interest rate and thus save money on interest. However, before you fall for this, you need to check whether you can pay off the debt during the promotional period, which is usually from 6 to 20 months. Post that, the standard balance transfer rate will apply.
Some banks do not allow balance transfers between themselves. Hence, you need to check whether you are eligible to transfer your debt from one card to another to avail this feature. Besides, there will be some balance transfer limit that you need to make note of. Also, you should pay off the debt in your existing card as much as possible before upgrading it to use the zero percent balance transfer feature as some banks would assess your ability to repay before approving your upgrade request.
Are You Sure About The Upgrade?
You might be tempted to upgrade your card to take advantage of the rewards programme. But are you really sure to upgrade your card and sacrifice the credit history attached to your existing card? This might not be a good idea to let go of your credit history with your existing card in lieu of few rewards points. Hence, take a well-informed decision before you go for the upgrade.
You need to study how applying for an upgrade will impact your Credit Score. Too many applications for a Credit Card may not be a great idea regarding your Credit Score. Hence, it is important to take a well-informed decision before upgrading your Credit Card.
The post Should You Upgrade Your Credit Card? appeared first on BankBazaar - The Definitive Word on Personal Finance.