3 Reasons Why You Should Upgrade Your Credit Card

Most of us start off our ‘plastic’ life with a basic credit card because that is all we are eligible for in the beginning of our careers. As we start using our cards, we realize our spending and repayment patterns.

So, you’ve had your card for some time now, and are wondering whether you should trade it in for a shinier, new plastic. Here are 3 reasons why you should upgrade your credit card:

Higher Credit Limit

The credit limit that you are offered on your credit card is based on your monthly/annual income. So, if you’ve seen an increase in your income, you will be eligible for a higher credit limit. Having a higher credit limit increases your purchasing power, and at the same time can positively affect your credit score as well. There is a component in your score called ‘credit utilisation ratio’ that takes into account the amount of credit you have used in relation to the total amount of available credit.
So, if you increase the credit limit on your card, then your total available credit will also increase. And if you keep your spending habit consistent, then your credit score could increase as well because a low credit utilisation ratio = higher credit score.
If you’re considering increasing your credit limit, you have two options: you can either increase the limit on your existing card or get a new credit card with a higher limit. This decision should be based on what perks you are currently offered on your existing card and if you can find a card to better suit your financial and lifestyle needs.

Credit Card Rewards

Basic credit cards, as the name suggests, offers ‘basic’ rewards. It’s a starting point to build your credit score and may not benefit you much when it comes to rewards. There is no dearth of credit cards in the market today – you can find a card that rewards every inch of your lifestyle whether it is shopping, eating out, travelling, and so on.
If your existing card is not rewarding you well enough as per your spending pattern, then it might be time for an upgrade. Using a card that rewards your spending behaviour can help you save significantly. There are credit cards that offer reward points, cashback, and air miles on eligible spends that you can redeem for gift vouchers, flight tickets, merchandise, discounts, and offset future transactions.
So, if you dine out frequently but currently have a card that rewards grocery spends, then you’re not reaping the rewards, literally, and it might be time to trade your card in for a dining credit card.

You’re Paying a High Annual Fee

If your current card rewards your purchases, but at the same time charges a high annual fee, then the benefits cancel out the cost, i.e. you’re not really saving or earning anything by using your card. One of the biggest incentives to use a credit card is to save on purchases by earning and redeeming rewards. But if your card is “high maintenance”, emphasis on the ‘high’ and does not offer higher benefits for the price, then it might be the right time for a change. Choose a card that either comes with no or low annual fees with good perks or even if it charges a high annual fee, it offers even better rewards.
You should also read the most important terms and conditions of your card to see what other charges you’re incurring. These could be the interest rate, late payment fees, and so on and compare it with other cards to see the difference in pricing.
Want to upgrade your credit card? In addition to saving on money, if you wish to save time on research as well, you can visit credit card comparison websites such as BankBazaar, compare the perks, fees, and charges of various cards, and apply online conveniently.