When discussing various important elements of your financial situation, one of the areas that is likely to be front and centre, are credit cards. While it is true that not every Canadian does own a credit card, the reality is that many do – often also possessing even 2 or more.
For much of the time, we will have a credit card or two that are geared towards specific purposes, including our needs and payment habits. While often times we find a strong match between our needs and the type of credit card we use – there are also plenty of times when the credit card are using may not be the best fit for our current financial requirements. In fact, you can also expect to change credit card types, multiple times over the course of your life.
While it may not always be clear to us when we should change to a different credit card – it is likely that you will be aware that your finances are not in the ideal state you would like them to be. That being said, perhaps changing to a different card could be an effective way of improving your finances and managing your payments more effectively. If you are thinking this making this type of credit change is in the cards (pardon the pun) for you – here are 3 situations when you should consider changing to a different type of credit card.
1) When You Are Able to Get a Lower Interest Rate
If you currently have a card with high interest, it may be that the large volume of interest charges you are in curing each month are currently making it difficult to pay down your credit. It may also be that you are carrying a balance from month to month, and if you had a lower interest rate you would be able to pay more of your balance off in a shorter period of time. This is an indication that switching to a card with a lower rate may be in your best interests. Moving from a card with a higher rate such as 19% down to a card with interest levels such as 14.99 – 11.99%, could make a big difference in your ability to improve your finances and pay off some more of your credit card debt.
2) When You’re Paying an Annual Fee for Rewards You’re Not Using
Secondly, it may also be that you have a credit card that offers various rewards or points. In addition to these rewards programs, you may also find that your card carries a high annual fee. While the annual fee may even be as high at $120 each year, the rewards you receive such as travel, merchandise, fuel, food and so on, may be a great benefit to you. However, maybe not. If you are paying a larger annual fee for a rewards card that accumulates rewards that either you don’t use or need – then perhaps opting for a different type of card that offers more suitable benefits for your is more appropriate for you at this time.
Once again, there are many credit cards that offer certain benefits and are geared towards certain individual’s financial habits. Many of these cards as well also come with much lower annual fees – as well as many cards, that actually have a $0 annual charge that can help save you some additional money each year.
3) When You are Looking for Specific Insurance Coverage that your Current Card Doesn’t Offer
Other times, the credit card you currently have may be a good fit in many ways, however it may not offer you an element that is very important to you. In this instance, the key feature here may be a specific insurance coverage package that you require. If your credit card doesn’t offer you the type of insurance, or the amount of insurance coverage you need, this is yet another situation where you may seriously consider switching to a new card. If you require travel, medical, vehicle coverage and so on – there are credit cards that provide highly comprehensive packages that can meet your needs. From these insurance centric credit cards, there will also be a variety of options.
These cards will offer a range of annual fees, as well as differing interest rates. If you still want to keep your interest rate lower and your annual fee somewhat lower as well, you can search for a new card that offers all of these features – and above all includes the insurance coverage criteria you are interested in the most.
To conclude . . .
As you can see in all of these scenarios, the current credit card you are using does not always seem to benefit your financial needs as much as they should. Know that you do have options – as there are are multiple credit card types that are available from many leading Canadian major banks and financial firms.
If you have bad credit, it is true that you may have slightly fewer options – or you may have to improve your credit score before you can switch to another credit card, such as a low interest rate card. None-the-less, you do not need to stay with the same card forever, because you have poor credit. It is still a good idea to seek out alternative credit options and cards that may help you improve your credit, instead of continuing to use a card that does more credit damage – or hinders your effectiveness to maintain your finances on an ongoing basis.