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If you’ve been using a credit card for a while, it may be time for an upgrade. Didn’t know you could upgrade your card? Don’t even know what that means? Here’s what you need to know!
Upgrading a credit card can mean a few different things. Sometimes, you can stay with the same card issuer but tap into a stronger rewards system. For instance, you might move from the American Express Blue Cash Everyday to the American Express Blue Cash Preferred card. The second gives you more cash back rewards on your purchases.
Or you might move from a basic no-frills credit card with one issuer to a great travel rewards card with another.
But rewards aren’t the only reason to upgrade your card. Here are a few other reasons you might consider a move:
- APR: if you’re currently paying a higher APR, you might consider moving to a card with a lower APR. This is especially true if you’re planning to use the card to finance a large purchase that will take several months to pay off.
- Higher Credit Limit: Starter credit cards often come with small credit limits. Moving to a new card could get you a higher credit limit.
- Better Perks: Rewards points and cash back aren’t the only perks credit card issuers offer. Most offer basic items, like additional coverage for rental cars when you use your card to book the car. But some cards have more–and better–additional perks than others.
When Are You Ready to Upgrade?
Maybe you’re ready for a credit card that gives you some of these new benefits. But do the credit card issuers think you’re ready?
It’s not enough to decide you want a different credit card. You need to actually qualify for one. Here’s what credit card issuers are going to look at:
- Have you had your current card for at least six months? While there’s not a set timeline for when you can upgrade, issuers want to see some history with a card before giving you a new one. If you’ve made on-time payment for six months, at least, you’re more likely to be approved for that new card.
- Is your credit score better than it was? Maybe you started in a low-rewards card because you didn’t have great credit. If that’s the case, pull your most recent credit score. If you’re better now than you were then, it may be time to apply for a new card. If you’re aiming for one of the best rewards cards, you may want to wait until your score is in the 700+ range.
- Have you established good credit card habits? Are you paying off your card in full each month? Are you running expenses through your card to take advantage of rewards? If so, you may be ready for an upgrade, especially one that comes with a higher credit limit.
How to Make the Switch
When it comes to upgrading your credit card, you’ve got a couple of options. One is to ask the issuer of your current card for an upgrade. The other is to apply for another card altogether.
Sometimes, a credit card issuer will make the first option available to you without your having to do anything. For instance, the Discover it Secured Credit Card allows for an automatic upgrade. Discover will check your credit card account monthly after you’ve had it for seven months. If you qualify, they’ll return your security deposit. They’ll basically convert your secured card to an unsecured Discover it card automatically.
Issuers will sometimes do similar things with other cards. This is especially true if they issue a new type of credit card that’s basically an upgrade for the one you already own. In this case, the new card may actually build on the same account, rather than opening a new one.
But if you approach your issuer to ask to switch from, say, the American Express Blue Cash Everyday to the Blue Cash Preferred, then you’ll probably be opening a new account. Just remember that this comes with credit caveats, such as a potential score ding from a hard credit pull. Generally, though, any negative effects will be minimal and temporary. This is especially true if the new account gives you a higher credit limit, which will improve your debt-to-credit ratio.
Applying for a card with another credit card company altogether is also a viable option. In this case, you’ll just fill out an application like you did the first time around. Again, applying for a new card can temporarily lower your credit score. But having another account with its own credit limit can help your score, too.
What if you’re mostly happy with your current credit card, but just want to make a tweak? In some cases, you can just ask your credit card issuer.
This is especially common when it comes to your credit limit. If you’ve had your card for a while and have used it responsibly, your issuer may give you a credit limit bump.
Increasing your credit limit is helpful if you want to max out a credit card’s reward potential. Say you get 3% cash back on grocery and gas spending. The best way to take advantage is to put all your gas and grocery purchases on the card for the month. At the end of the month, pay off the full balance.
This is great, but it’s hard to do if you have a measly $500 credit limit. But if you’ve managed that low limit responsibly, your card issuer may decide to bump it up just because you ask.
The other option is to lower the card’s variable APR. Say you’ve decided to put a large purchase on your credit card, or have had to use it for an emergency fund. If your credit has improved recently, you may be eligible to lower the APR on the card. Again, you’ll just have to ask your card issuer.
These options may also result in a credit pull, which is usually considered a credit application. Technically, you are applying for more credit, just on the same card.
Upgrading your credit card, whether for a higher credit limit, better rewards with big bonuses, or a lower APR, can be a great option. Just make sure you’ve used your card responsibly and are always improving your credit score. Then, you can move on up into a card that works even better for you.