How to switch to a new credit card from the same bank

Switching to another card from the same issuer might seem like the perfect solution to a number of credit card problems. By doing this, you may receive a better or simpler remuneration, a higher line of credit, or a lower interest rate. One very practical reason for cardholders to switch is to swap a card with an impending annual fee for a card with no annual fee.

In some cases, keeping the same issuer means no application and (better yet) no credit check, meaning no impact on your account.

Here are eight questions you need to answer before you switch, as well as the basic rules for replacing major card issuers.

Questions to ask yourself before changing cards

1. Will the issuer have a credit check?

One of the benefits of staying with the same issuer: no strict credit check. If you choose a different card from your current card issuer, most companies won’t check your credit at all. Others will do a soft check that won’t affect your score. But with some card switches (and some issuers) there will be a tough call.

It came as no surprise to Bruce McClary that the issuer canceled his loan when he changed his card. “Because I wanted to change my credit limit,” says McClary, vice president of public relations for the National Credit Counseling Foundation.

When you ask your issuer about replacing cards, McClary advises asking someone “closer to the underwriting process” to make sure that person knows the answer.

It is also wise not to change cards if a major purchase such as a house or car is less than a year away. Depending on your score, a couple of points can mean the difference between hundreds or thousands of dollars in interest over the life of your loan.

2. Are there different rules for different cards?

Most card issuers allow you to switch cards within the same card family without an application or credit check. But if you want to switch to or from one of the issuer’s co-branded cards, or if you decide to change card families, you may need to apply and go through a credit check as if you had never been a buyer.

If your goal is to simplify paperwork or change cards without a tough credit check, first ask which issuer’s card (if any) is a good fit.

3. Will I be eligible for a signup bonus?

You are technically not a new customer. Therefore, most card companies do not offer you these welcome bonuses. However, some cards offer special bonus rewards as a perk for some cardholders changing cards. It is important to check with your issuer if you are eligible for any referral bonuses.

4. Is my credit score good enough?

You don’t want to switch to a new card if your credit and credit score isn’t in top shape, as this could affect the APR you get on it. This is especially important if the company conducts a rigorous credit check.

If so, it might be worth waiting until you have time to raise your score. Many issuers also require your account to be in good standing. If you are late on a payment or are about to send this balance to collections, the transition is most likely not for you.

5. How will the old and new cards be submitted to the credit bureaus?

The average age of your accounts and the length of your credit history are also important credit scoring factors. Hint: the older the better. So think twice before changing the oldest card in your wallet.

To understand how the transition could affect your credit, be sure to ask your issuer if the new card will show up as a new “trading line” on your credit report and if your credit report will show the age of the account as the new card or the old one. As long as the transition doesn’t affect the length of your credit history, you’ll be fine.

6. How will the swap affect my utilization rate?

If the new card comes with a different credit limit, this could potentially benefit or hurt your credit as it will affect your credit utilization rate.

Credit utilization – the amount you have borrowed compared to your credit limits – is the second most important factor in credit scoring calculations after timely payments. The credit scoring formulas take into account your individual card usage rates as well as the total usage of all your accounts combined.

If the new card you receive after switching has the same credit limit, your usage will remain the same. If it has a higher limit, it will lower your usage and potentially boost your score. But if the credit limit is lower, your usage will increase and this may cause your score to drop.

7. What happens to existing awards?

If you’ve spent five years collecting points to fund this big trip, you don’t want to lose them just because you change cards the night before your trip. Check your rewards balance and indicate these points or miles when talking to the issuer. Find out if you might lose some or all of them in the transition, and what steps you can take to protect them.

8. Should I shop for other issuers?

It’s wise to choose all options before switching cards, especially if you have to reapply anyway or your current issuer is about to forfeit your credit.

Even if you can get a new card without a credit check or additional paperwork, “it’s still worth looking at what else is out there,” says McClary. “Look also at some competitive offers from other lenders.”

Major card issuers exchange cards as follows:

bottom line

Which credit card would be the best choice for you? It all depends on what you need. Therefore, check whether the transition to a new card will satisfy these needs. Before changing your card, be sure to answer your questions and check your credit score to be prepared for the outcome.

Dana Dratch is a personal finance and lifestyle writer who loves to talk about money and credit. She also writes red herring puzzles (from Kensington Books), which are often money-driven. Contact her at: @ReadAboutMoney.