How do I switch credit cards and not affect my credit score?
shirley ivery asked:
I want to get a frequent flyer credit card but I already have 3 credit cards with generous limits. I don’t need these credit cards and I would like to cancel them and have this “possible credit” to go towards the new card. I heard once that canceling a credit card has a negitive effect on your credit score. Is this true? If so, how do I switch credit cards and avoid affecting my credit score in a bad way?
Edith
I want to get a frequent flyer credit card but I already have 3 credit cards with generous limits. I don’t need these credit cards and I would like to cancel them and have this “possible credit” to go towards the new card. I heard once that canceling a credit card has a negitive effect on your credit score. Is this true? If so, how do I switch credit cards and avoid affecting my credit score in a bad way?
Edith
Tags: Cards Credit, Credit Cards, Frequent Flyer Credit Card
November 6th, 2010 at 9:51 am
I think you have that a bit the wrong way round.
First of all, if you don’t need all the cards and aren’t using them then get rid of them asap. As long as you have them then you automatically have a high credit allowance against your name. For instance, if each card has a limit of say $10,000 then you really have access to $30,000 to spend any time you want. If you go for a loan in the future and still have those cards then the bank may deem you too high a risk because you have too much credit available to you.
Cancelling these cards definitely does not have a negative effect on your credit score, it has a positive one because you are reducing what’s known as your credit risk.
If you have small amounts owing on more than one card then either get a new card and transfer the balances from the smaller cards or do the same thing with one of your existing cards. That’s called consolidation and it will help you. Better to pay interest on one card than 3 or 4.
I do not think that “possible credit” is transferable to a new card, unless the companies are linked.
No, switching cards does not have a negative effect on your credit score. You should be free to shop around any time you want to get a better deal.
For instance, I have a small amount to pay off a credit card I have. I use the credit card companies that offer 0% interest for 12 months. That means that I can pay off the balance monthly and I won’t be charged interest on the outstanding amount. When the 12 months is up, I transfer the balance to a new card that offers the interest free period. No problems. I make sure that I close all credit cards that are no longer needed.
Re the frequent flyer points, you need to find out what frequent flyer company you want to go with and then find out what credit card goes with that. Some even have linked cards that offer double points so shop around for the best deal.
I hope that covers it. If in doubt then see a financial adviser or go visit your bank manager.
Good luck