5 Steps to Take If You Carry a Credit Card Balance

5 Steps to Take If You Carry a Credit Card Balance

A perfect storm is brewing for credit card holders right now. Record inflation means that absolutely everything is more expensive. As a result, more consumers are seeing their credit card balances balloon. This has led to even people who never carried a balance before finding that they’re struggling to pay their bill in full each month.

At the same time, many cardholders are seeing their credit card interest rates creep up in line with the Federal Reserve’s recent rate increases. Translation: Interest payments are gobbling up a bigger share of credit card balances.

Indeed, credit card debt surged by $46 billion from April to June 2022 — a record 13% jump from the prior year, according to data from the Federal Reserve Bank of New York. If you’re one of the cardholders who can’t pay credit card debt in full, here are five steps you can take to address it.

Step 1: Check your Credit Card Interest Rate

If you haven’t carried a credit card balance before, you may not be aware of what interest rate your credit card is charging. But it’s important to know exactly how much you’re getting charged so if you need to, you can budget for interest expense as well as your purchases.

The average credit card interest rate for the second quarter of 2022 was 18.89%, according to WalletHub’s Credit Card Landscape study published in July. (Depending on what type of credit card you have, your credit score, and your credit history, you may have a higher or lower interest rate than the average.)

With interest rates this high, it can be a real financial setback to carry a balance for an extended length of time, making only the minimum credit card payment. You may find that you are only paying interest and making little headway in paying off what you actually spent.

Recommended: What is a Charge Card

Step 2: Understand How Your Grace Period Works

If you pay your credit card statement balance in full by the due date, a credit card grace period will usually take effect for the next billing cycle. That means you won’t owe interest on new purchases until the due date for the next billing cycle. If you pay that statement balance in full by the next due date, the grace period will continue into the next cycle, and on and on.

But, if you make only the minimum payment or a partial payment on the full statement balance by the due date, you’ll get charged interest on the remaining balance and lose your grace period for the next billing cycle. This means you’ll owe interest on any purchase immediately. Even if you go back to paying the full balance, your grace period may not renew for several more cycles, depending on the specific terms of your credit card.

If you’re in a position where you can’t pay credit card bills and must move to partial payments, make sure you’re aware of the additional interest expense you’ll incur on the remaining balance. Try your best to stop making new purchases with that card since interest will be charged on those purchases immediately.

Recommended: When Are Credit Card Payments Due

Step 3: Look at Changing Your Due Date

If you’re feeling overwhelmed because many of your bills are due at the same time, talk to your credit card company about changing your due date. You might be able to move your credit card due date to a day of the month that works better for your budget, so the payments you owe are a bit more staggered.

While this switch might not help immediately to pay down credit card debt, it could offer some relief in the long run.

Recommended: How to Avoid Interest On a Credit Card

Step 4: Explore Ways to Pay Off Your Balance Faster

You may find that with higher interest rates and inflationary spending, you need a more efficient way to pay off your credit card debt, such as by refinancing credit card debt. Luckily, there are some options for how to pay off credit card debt, though keep in mind the best way to pay off credit card debt will depend on your financial specifics.

Balance transfer credit cards that offer a limited time low or sometimes even 0% interest rate can help — especially if you think you can pay the balance in full during the promotional low-rate period.

Another option you might consider is applying for a low-interest personal loan to pay off credit card debt in full. This could help you secure a lower interest rate, and by consolidating your credit card debt, you’d have fewer due dates to keep track of. Keep in mind, however, that there are pros and cons of personal loans to pay off credit card debt.

Recommended: Tips for Using a Credit Card Responsibly

Step 5: Consider Using a Budgeting Tool

Higher prices on everything from gas to groceries, plus higher interest rates, can make it harder than ever to make your credit card payments. That’s a signal it’s time to take a close look at your spending, perhaps with the help of one of the many online budgeting tools available.

Personal finance tools can help you understand just how much your cost of living has risen in recent months and make it easier to flag places you can cut back. Some can help to pinpoint fees you may be paying unwittingly or the automatic payments you’re making on your credit card that could get trimmed. Cutting these costs can then make it easier to pay off credit card debt.

Recommended: Can You Buy Crypto With a Credit Card

The Takeaway

Runaway inflation and high interest rates are big contributors to ballooning credit card balances. If you’re struggling with a larger balance, understanding how credit cards work as well as taking steps to pay off credit card debt faster and budget smarter can help.

Using credit cards wisely can be a helpful weapon in the battle against higher prices and skyrocketing interest rates.


Photo credit: iStock/Sneksy



Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.


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Guide to Transferring a Credit Card Balance to Another Card

Guide to Transferring a Credit Card Balance to Another Card

Getting out of credit card debt may be easier by taking advantage of balance transfers. Moving your high-interest debt to another credit card with a lower interest rate can save you on interest and also allow you to streamline multiple debt payments into one.

Before you take the leap, it’s important to know how to do a balance transfer on a credit card. It’s also critical to know what to look for when choosing a balance transfer card to help ensure that making this financial move pays off.

How Do Credit Card Balance Transfers Work?

Completing a balance transfer is one way that you can effectively pay a credit card bill with another card. A credit card balance transfer allows you to take the balance from one or multiple credit cards and transfer it to a new credit card.

Ideally, you’re transferring the balance to a credit card with a lower interest rate. Some balance transfer credit cards even offer a 0% introductory annual percentage rate, or APR, for a predetermined amount of time, which can allow you to focus on paying down your balance without accruing interest.

Balance transfers can also allow you to simplify your payment schedule by rolling all of your credit card debts onto one new card that you’ll then work on paying off. That way, you’ll only have to worry about one monthly payment rather than multiple due dates and minimum required payments. However, you’ll likely incur a balance transfer fee in order to move over your balance to the new card.

Keep in mind that while credit card balance transfers are helpful when it comes to potentially saving on interest and simplifying payments, they aren’t an instant way to get out of debt. You need to commit to using a credit card responsibly by making on-time payments and avoiding getting into more debt. You’ll also want to ensure that you can pay off your balance before any promotional APR offer ends, at which point the interest rate will increase.

What to Consider When Choosing a Balance Transfer Credit Card

Before opening a new credit card and requesting a balance transfer, you’ll want to know a few things. Specifically, make sure you know how long the introductory APR offer will last, if there is one, as well as the types of debt you can transfer and the fees you may need to pay. That way, you can ensure you choose a credit card that meets your needs.

Length of the Introductory APR Offer

Many credit cards, in an effort to gain your business, will offer introductory APRs for as low as 0% — though you’ll most likely need good or excellent credit to qualify for these cards. When doing your research, make sure to look at how long the introductory period is, as they can last anywhere from six to 21 months.

Due to how credit cards work, once the introductory period ends, the credit card issuer will charge you their normal APR — and it could be higher than your old credit card. That’s why it’s critical to assess whether the introductory period will provide enough time for you to pay off your balance in full.

Recommended: What is a Charge Card

Types of Debt You Can Transfer

Different credit card issuers will have varying policies on what types of debt you can transfer. Aside from credit card debt, you may be able to transfer other types of debt, such as:

•   Personal loans

•   Auto loans

•   Medical debt

•   Retail or store cards

•   Student loans

Additionally, keep in mind that issuers may not allow balance transfers from certain cards.

If you know there’s a certain type of debt you’d like to transfer, make sure to check with a credit card issuer to find out what is or isn’t allowed before signing up for a new card.

Balance Transfer Fees

Although you may not have to pay interest if you have a 0% APR introductory period, you may still have to pay a balance transfer fee. This fee is usually either a percentage of your transfer amount — typically 3% to 5% — or a flat fee, depending on the card issuer. For example, if you want to transfer $6,000 and the credit card issuer charges a 3% balance transfer fee, you’ll need to pay $180.

It’s important to factor this fee into the equation to ensure making a balance transfer will actually save you money. You should be able to find out what the balance transfer fee is by looking at the cardholder agreement for the credit card.

Timeline for Balance Transfers

Some credit card issuers have deadlines as to when you can conduct a balance transfer after opening a card. For instance, you may only have a matter of weeks from when you open the card to transfer over your balance.

The exact timeline will vary from issuer to issuer, so make sure to take a look at your issuer’s credit card rules, and be prepared to act when you get your new card.

How to Transfer A Credit Card Balance to Another Card: Step by Step

If you decide you want to transfer existing debt to another credit card, you’ll first need to take stock of your current debts and their interest rates. Also determine how much of your debt you want to transfer. From there, here’s how to do a credit card balance transfer.

1. Apply for a Balance Transfer Card

Once you’ve picked the balance transfer credit card you want, it’s time to apply for it. To do so, you’ll need to submit the required information, which may include your name, address, Social Security number and income.

Additionally, you may be subject to a hard credit inquiry, which could temporarily affect your credit score. If you’re approved, you can take the next steps.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score

2. Transfer the Balance

Contact your new credit card issuer to ask what the exact steps are to conduct a balance transfer, and to find out whether it’s possible to transfer the amount you want to. When it comes to how to transfer a balance from one card to another, there may be several methods available to you, including:

•   Online transfer: You may be able to log into your online account and request a transfer by filling out a form. In some cases, you may be able to request a balance transfer online when you fill out your credit card application.

•   Phone transfer: You may be able to call the number on the back of your credit card and make a transfer over the phone. Make sure you have all the required details on hand before calling.

•   Balance transfer checks: Some credit card companies issue you checks to make the balance transfer. You’ll make the check payable to the credit card company from which you want to make the transfer. Just make sure to ask whether this will be considered a cash advance (that’s what you’d do if you were trying to transfer money from a credit card to a bank account, and it generally has a higher interest rate).

3. Wait for the Balance Transfer to Go Through

After you’ve made your request, you’ll need to wait for your new credit card to finish processing the balance transfer. In the meantime, keep your old credit card open and continue to make payments on any amount that’s due. That way, you’re not on the hook for a late payment, which could lead to late fees and have an effect on your credit.

Recommended: When Are Credit Card Payments Due

4. Pay Off Your Balance

Once the balance transfer is complete, you can start paying it down. Follow the terms stated on your cardholder agreement to ensure that you continue to qualify for the introductory APR — for instance, some issuers may revoke your rate if you make late payments.

Aim to pay off the entire balance before the introductory period is over and a higher interest rate kicks in.

Recommended: How to Avoid Interest On a Credit Card

Credit Card Balance Transfer vs Personal Loans: What’s the Difference?

Both credit card balance transfers and personal loans give you the opportunity to save on high-interest debt, but there are key differences between the two. For one, personal loans are a type of installment loan, where you borrow a lump sum of money and pay it back over time. Meanwhile, a credit card is a type of revolving credit that allows you to keep borrowing money up to your credit limit as long as you pay down your balance.

Personal loans tend to charge interest right when the loan is disbursed, whereas with a credit card, you may be able to take advantage of an introductory APR, if you qualify for one. However, balance transfers tend to have lower limits compared to personal loans. Plus, personal loans may offer lower interest rates compared to a credit card’s purchase APR, which is what will kick in after the promotional period ends.

Recommended: What is the Average Credit Card Limit

Doing a Credit Card Balance Transfer: What to Know

Getting a credit card balance transfer can help you manage your debt, but isn’t the answer for everyone. To decide whether it’s right for you, determine the amount of debt you want to transfer and see whether it’s likely the amount will be within the credit limit of your new credit card. If you have a high amount of debt, a personal loan may be a better choice.

In addition, a balance transfer only makes sense if you can qualify for a lower interest rate than you have with your current credit card. If your credit score isn’t that great, you may not qualify for an introductory APR offer. In this case, it may be better to seek alternatives, such as taking out a personal loan or sticking with your current credit card until you can raise your credit score and qualify for a better card.

Recommended: Can You Buy Crypto With a Credit Card

The Takeaway

Knowing the specifics of how to transfer a credit card balance can help you determine if doing so is financially smart. Take the time to calculate the fees you may be paying for a balance transfer, and compare that amount to how much you’d be saving on interest charges. If the fee you’d pay is much lower than the interest charges, transferring a balance from one card to another may be worth it.

Looking for a new credit card?

FAQ

Do balance transfers affect your credit score?

Balance transfers can affect your credit score since you’re applying for new credit, which may result in a hard credit inquiry. This can cause a temporary drop in your score.

How long does it take to transfer a balance from one credit card to another?

Typically, a balance transfer takes anywhere from five to seven days. However, it may take up to a few weeks to complete depending on your credit card issuer.

How do you qualify for a balance transfer?

You typically need a good or excellent credit score — meaning 670 or above — to get approved for a balance transfer credit card.


Photo credit: iStock/CentralITAlliance



Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.


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What to Know About Using a Credit Card Cosigner

Typically, to qualify for a new credit card, you need to meet the card issuer’s underwriting requirements — including the minimum credit criteria. If you don’t have a long credit history or a strong credit score, asking if someone can cosign for a credit card for you can help you get approved.

However, this type of arrangement should be approached cautiously for various reasons. Before getting a credit card with a cosigner, here’s what you need to know.

What Is a Credit Card Cosigner?

A credit card cosigner is an individual who agrees to be responsible for a primary cardholder’s debt. If the primary cardholder fails to make payments or defaults on their debt, the cosigner is expected to assume their financial burden by repaying the outstanding debt, regardless of the circumstances that led to the account’s status.

Because of how a credit card works, a cosigner should ideally have a strong credit score and a solid credit history.

Why Might Someone Need a Cosigner to Open a Credit Card Account?

A person might decide to secure a cosigner for credit card applications if they have less than a “good” credit score (meaning below 670). This is because applicants who don’t have strong credit might find it harder to get approved for a new credit card at a low APR.

Additionally, credit card applicants must meet age requirements to get a credit card. Applicants who are under 21 years old are required to secure a cosigner if they can’t prove their ability to repay the card using their own income. This credit card rule from the Credit Card Accountability Responsibility and Disclosure Act of 2009 — also known as the Credit CARD Act — was designed to avoid predatory lending practices toward young cardholders.

Even if an applicant is 21 or older, they might need a credit card cosigner if they don’t have sufficient income. Keep in mind, however, that many credit card companies don’t allow for cosigners, so searching for one that does could increase the amount of time to get a credit card.

Parties Involved in Cosigning a Credit Card Account

Aside from the credit card issuer, there are two parties involved when opening a new credit card with a cosigner: the cardholder and the cosigner.

The Credit Card Holder

The individual who is the primary cardholder is the person whose income, age, or credit doesn’t meet the card issuer’s minimum requirements. If they successfully acquire a willing cosigner for a credit card application, the account is under the cardholder’s name. The cardholder is also the individual who will receive the physical credit card to use toward purchases.

As the primary cardholder, they’re still considered the first party that’s responsible for making on-time monthly payments for at least the minimum balance due.

Recommended: When Are Credit Card Payments Due

The Cosigner

A cosigner is an individual who meets the card issuer’s underwriting requirements. They provide a financial guarantee that vouches for the cardholder. This financial responsibility is taken on by the cosigner as soon as the credit card application is approved.

Typically, cosigners don’t enjoy the perks of using the physical credit card. They don’t have access to the credit line, nor do they have ownership of the goods that were paid for using the credit card.

However, if the cardholder fails to pay back their credit card debt, the card issuer will immediately seek payment from the cosigner. Credit card companies can also report late payments and default notices to the credit bureaus, and those updates will adversely impact a cosigner’s credit score and appear on their credit report.

Pros and Cons of Credit Card Cosigning

As mentioned previously, there are reasons to approach becoming a credit card cosigner with caution. However, there are positives to cosigning as well.

Pros of Credit Card Cosigning Cons of Credit Card Cosigning
Helps the primary cardholder access a credit line they otherwise may not qualify for Cosigner is responsible for unpaid credit card debt they did not accumulate
Allows someone under the age of 21 without regular income to access a credit card Might affect a cosigner’s access to new loans or lines of credit since a cosigned credit card impacts their debt-to-income ratio
Positive credit card activity is reported to credit bureaus for both the primary cardholder and cosigner Late payment activity and default is reported to credit bureaus for both parties
Helps secure a lower credit card APR for the primary cardholder Card issuers can send unpaid debt to collections, sue cosigners, or request wage garnishment or property liens against the cosigner to collect on the debt
Poor borrowing and repayment habits can negatively affect the relationship between the cardholder and cosigner

Credit Card Cosigner vs. Authorized User

Getting a credit card with a cosigner is different from being added as an authorized user on a credit card under someone else’s account. A cardholder can choose to add an authorized user to either their new or existing credit card account.

Authorized users can get their own physical credit card with their name on it. They can use the card to pay for goods and services, in the same way a primary cardholder uses the card.

However, unlike a cosigned credit card, the authorized user doesn’t have any legal responsibility to repay the debt they’ve put on the card. In this arrangement, the primary cardholder still bears that responsibility. Still, any account activity — whether positive or negative — impacts the primary cardholder’s credit as well as that of the authorized user.

This option is often used to help someone build their credit or simply access borrowing power. For example, parents may add their child as an authorized user on a credit card.

Recommended: Tips for Using a Credit Card Responsibly

Credit Card Cosigning vs. Joint Accounts

Cosigners don’t have access to the line of credit. Through a joint account, however, both parties have equal borrowing power through the credit card, as well as equal financial responsibility for the debt incurred. In other words, both parties are responsible for paying outstanding balances on the credit card — even if the purchase was made by only one person.

Joint accounts are commonly used by individuals who share other financial responsibilities together, such as spouses, family members, or business partners. Since the account is shared and both parties are liable for the account, both of their credit scores and credit reports are impacted by the card’s activity.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score

Alternatives to Cosigning a Credit Card

Outside of the above options, there are a couple of alternatives to applying for a credit card with cosigner support.

•   Secured credit cards: Secured credit cards are a useful credit-building tool for primary cardholders who would otherwise not qualify for an unsecured card. Credit card requirements for a secured credit differ a bit, as a deposit is needed that acts as collateral and usually becomes the card’s credit limit. The deposit is returned when the account is closed.

•   Guarantor loans: Unlike a cosigned credit card that holds the cosigner responsible for the debt from the start, a guarantor loan only puts legal responsibility on the cosigner if the lender has exhausted all other options through the primary borrower. This marks a major difference between a guarantor and cosigner. Plus, a fixed loan is a known quantity of debt, rather than a revolving line like a credit card is.

Recommended: What is the Average Credit Card Limit

The Takeaway

Becoming a credit card cosigner or asking someone to cosign a credit card is a huge responsibility that poses significant risk for the cosigner. Only consider this route if both parties — the primary cardholder and cosigner — understand the implications and can financially handle the debt that’s put on the card.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

What is the minimum credit score for a cosigner?

Cosigners typically need a minimum credit score of 670, which is considered “good” based on the FICO credit scoring model. Credit requirements, however, vary by card issuer. Before securing a cosigner for a credit card, ask the issuer about its cosigner criteria.

Can I cosign for a credit card with my child?

Some credit card issuers allow parents to cosign on a credit card for their child. However, not all issuers provide this option. If the desired card issuer doesn’t permit cosigners, another option is adding your child as an authorized user on your personal credit card.

Is it possible to get a credit card with a cosigner?

Technically, yes, it is possible to get a credit card with a cosigner. However, this option isn’t always offered by major credit card companies.

Whose credit score is impacted with a cosigned credit card?

If the primary cardholder is late on their payments or defaults on the credit card debt, the cosigner’s credit is adversely affected. Additionally, the cosigned card is considered another open account on the cosigner’s credit record so it can impact their ability to secure their own loans, if needed.


Photo credit: iStock/PeopleImages

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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What Happens to Credit Card Rewards When You Die?

Although you might not think twice about amassing miles and points, it’s wise to learn what happens to credit card rewards when you die. After all, you don’t want the work that went into earning rewards — and the value of those credit card rewards — to be all for naught.

While some credit card rewards die with you, some issuers do allow redemptions or transfers after death. Here’s a closer look at what happens to credit card rewards when you die, as well as what steps you can take to avoid forfeiting your rewards.

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What Are Credit Card Rewards?

Credit card rewards are a type of currency that can come in the form of credit card points, miles, or cash back rewards. They’re designed to incentivize cardholders to make eligible purchases on their rewards credit card.

As you make purchases and earn various credit card rewards, you can choose to hold onto the rewards in your account until you have enough to redeem toward a high-value purpose. Each rewards program lets cardholders redeem rewards in different ways, depending on its rules. Common redemption options include statement credits, travel bookings and reservations, special experiences, merchandise, gift cards, and more.

Recommended: Tips for Using a Credit Card Responsibly

What Happens to Your Credit Card Rewards Upon Death?

Having a stockpile of credit card rewards after death might lead to a sticky situation for your surviving family. Akin to your credit card debt after death not passing on to your survivors in some states, some credit card rewards “die with you” and can’t be redeemed or transferred to your family or estate.

Conversely, some credit card issuers, like American Express and Bank of America, offer a limited period during which authorized trustees of your estate can redeem unused rewards. Certain programs that permit reward redemptions or transfers after death might require the outstanding account balance to be paid in full.

In other words, what happens to your credit card rewards after you pass on essentially depends on the terms laid out in your rewards program agreement. Some rewards terms specifically state that rewards aren’t the property of the cardholder and can’t be transferred through inheritance.

Recommended: What is the Average Credit Card Limit

What To Do With Credit Card Rewards if the Account Holder Dies

If you know that your deceased loved one amassed points, credit card miles, or cash back rewards, there are a few steps you can take to address it:

1.    Check on accounts and rewards balances. If your deceased loved one gave you access to their account before their death, log in to get an overview of their remaining rewards balances across all accounts. If you don’t have access to their accounts, proceed to the next step.

2.    Prepare paperwork. You’ll likely need to provide proof of the primary cardholder’s death, such as a copy of their death certificate. Additionally, you might need to provide the name and contact information of the authorized trustee, letter of testamentary, or other details.

3.    Contact the card issuer. You must inform the card issuer in the event of a primary cardholder’s death. Supply the necessary documentation you’ve gathered, and inquire about your options to redeem the rewards.

Generally, credit card companies offer at least one of a few options, though how a credit card works will vary by issuer. The rewards might be forfeited if they’re non-transferable or expire upon the cardholder’s death. Some credit card terms automatically convert the rewards into a statement credit, while other issuers allow rewards redemption or transfers to another existing, active account.

Ways You Can Avoid Forfeiting Your Credit Card Rewards

You’re ultimately at the mercy of your reward program’s user agreement in terms of what to do with credit card rewards after death. However, planning ahead can help you avoid relinquishing earned rewards.

Not Hoarding Your Points

To avoid facing a scenario in which your credit card rewards die with you, make an effort to redeem credit card points or miles on a rolling basis.

For example, at the end of each year, use credit card rewards to travel for less or apply them to your account as a statement credit. Keep in mind that different redemption options have varying valuations, so look into which redemption strategy makes sense for your situation.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score

Choosing Cards With Favorable Death Terms

Although a particular program might offer enticing rewards — such as the chance to enjoy credit card bonuses — it might not be advantageous if the program has strict terms regarding a cardholder’s death.

American Express, for instance, has fairly lenient terms when dealing with the rewards balances of a deceased cardholder.

Recommended: How to Avoid Interest On a Credit Card

Using a Reward-Tracking Tool

If you have multiple rewards credit cards in your rotation, using a reward tracking app can help you and your surviving family organize and track your rewards. Apps like AwardWallet and MaxRewards let you easily see all of your rewards in one view.

Naming a Beneficiary in Your Will

Although it’s not a foolproof way to avoid forfeiting your credit card rewards, adding a beneficiary to your will is a smart move. This way, if your card issuer allows rewards transfers or redemptions by authorized individuals, your beneficiary is formally named on your estate documents as your desired recipient.

The Takeaway

Since there’s no way to know when an accident or unforeseen health issue will result in your death, it’s best to be prepared. If possible, redeem earned credit card rewards in a timely manner so you can enjoy them in life.

If you don’t have a rewards card yet, the SoFi credit card can help you earn cash-back rewards on your purchases.

FAQ

Can I transfer points from the account of a late family member?

Whether you’re allowed to transfer points from your deceased relative’s rewards credit card account depends on the card program’s rules. Some banks allow points transfers, while other programs state that points are non-transferable. Contact the card issuer’s customer support team to learn about its point transfer policy.

Can an authorized user use credit card rewards upon the death of the account owner?

It depends. Not all credit card rewards programs allow authorized users to use a primary cardholder’s earned rewards. Those that do might have restrictions on how and when rewards can be redeemed after a primary user’s death, if at all.

What happens to the miles when someone dies?

Miles earned by a deceased primary credit card rewards cardholder might be forfeited, transferred, or redeemed by the estate or surviving family, depending on the rewards program. Terms vary between card issuers, and even across travel rewards programs, so call the program’s support team to learn about its terms.

Can estates redeem points after death?

Some rewards credit cards allow estates to redeem points after the primary cardholder’s death. American Express, for example, allows estates to request points redemption by submitting a formal written request, death certificate, and other details related to the redemption.


Photo credit: iStock/supatom


Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.



Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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A Guide to Switching Credit Cards

Whether you’re interested in switching credit cards because you found one with better rewards or due to another reason, such as wanting to change to an option with no annual fee, it can make sense to do so. Also called a credit card product change, some banks allow you to make a switch without much consequence.
But before doing so, it’s best to understand how changing credit cards works and how to switch credit cards properly.

What Is a Credit Card Product Change?

A credit card product change is where a cardholder switches from one credit card to another credit card offered by the same bank or issuer. Because each credit card offered by an issuer is referred to as a different product, a product change is simply switching credit cards.

In theory, switching credit cards within the same bank won’t affect your credit as you’re not applying for a new credit card. Typically, your credit limit will stay the same for your new card as it was for your previous card.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score

How Does a Credit Card Product Change Work?

When you undergo a product change, you’re not canceling a credit card. Rather, you’re either making a switch to an equivalent credit card, upgrading to a card with more benefits, or downgrading to a card with fewer benefits. In many cases, your bank may send you targeted offers for different credit cards, and you may be able to switch to one of these credit cards.

Once you switch credit cards, you’ll no longer be able to use the credit card you previously had and can start using the new credit card instead. Features and benefits will most likely differ, and in some cases, so may your credit limit.

Recommended: What is the Average Credit Card Limit

Rules for Credit Card Product Changes

When it comes to following the credit card rules, each credit card issuer will have its own rules regarding product changes. For instance, some won’t allow you to change to certain credit cards, while others may allow a product change only if you’re switching to a similar type of card.

In general, though, there are some rules that are usually the same across the board. For one, cardholders can’t switch from a business credit card to a personal one and vice versa, since these are considered different classes of cards and may have different credit limits.

Additionally, issuers typically only let you change credit cards as long as they’re within the same family of cards, as this can impact how credit cards work. However, each issuer has a different definition of what that means.

For instance, if you have a travel rewards credit card and the bank offers two other cards that use the same travel portal to redeem points, all of those cards could be considered in the same family. Or, if you have a co-branded card with an airline, other co-branded cards with that airline may also count as within the same family of cards.

Unfortunately, it’s not easy to find information about whether you can switch your specific credit card to another. Even if you can find details from another bank, your card may not have the same rules and processes. Your best bet is to call your credit card issuer and ask them directly.

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Pros and Cons to Switching Credit Cards

There are certainly upsides to converting credit cards rather than closing out your account and starting over. However, there are downsides to take into account as well.

Pros of Switching Credit Cards Cons of Switching Credit Cards
Generally won’t affect your credit score if the bank doesn’t conduct a hard credit inquiry Not easy to find definitive information online about product change rules
Possible to get more benefits with the new card you switch to May not be able to switch to your preferred card, depending on issuer’s rules
Won’t need to submit a new credit application May lose existing credit card rewards or points

Guide to Switching Credit Cards

Switching credit cards can be a relative straightforward process, but it does involve contacting your bank or credit card issuer. Here are some best practices to keep in mind before making the switch.

Decide Which Card You Want

You want to make sure your new card will be a good fit for you. Before making moves to change your credit card, check your bank’s website to see what other products are currently on offer. In some cases, you may find that you’ll get upgrade offers in the mail or after logging into your bank account online.

Contact Your Bank or Credit Card Issuer

You’ll also want to contact your bank to ask whether you can switch to the card you’ve decided on. If you can get the credit card you want, ask the bank what else you’ll need to do before you can officially make the switch.

You’ll also want to ask about certain features and benefits you’ll receive if you do decide to change credit cards. Specifically, make sure to ask about the following:

•   Whether your credit limit will remain the same after switching cards

•   If you need to pay off the balance before switching

•   Whether you’ll be subject to a hard credit inquiry

•   Whether you can keep existing rewards you’ve earned with your current credit card

•   What your new APR will

•   If you’re eligible for credit card bonuses with the new card

Learning these answers will help you to make an informed decision and avoid getting caught off guard after making the switch. You may even be able to negotiate for things like bonuses or perks that you may not have gotten otherwise.

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Effects of a Product Change on Your Credit Score

It’s important to determine whether switching credit cards will have an adverse effect on your credit score. When it comes to your credit utilization, as long as you’ll have the same credit limit with your new card, you should be able to maintain it. This is unlike closing a credit card, where you’ll lose that credit limit, which could result in an increased credit utilization ratio and a negative impact to your credit score.

In some cases, your card issuer may require a hard credit pull before allowing you to switch credit cards, which could temporarily ding your credit score. Your issuer may make this request for a variety of reasons, including to ensure your credit profile is still good and to determine whether to continue offering you the same amount of credit (especially if you tend to max out your card). You’ll be asked permission before the hard inquiry is conducted, so you’ll know it’s coming.

Effects of a Product Change on Your Credit Card Rewards

Depending on what card you want to switch to, you may be able to keep your existing credit card rewards. For instance, if you’re switching to a credit card that has the same rewards structure or program, you’ll probably be able to keep the points or miles you’ve earned.

However, if you’re going from a travel rewards card to a cash back program, for instance, your bank may not allow you to keep your existing rewards. That means you’ll have to use up your rewards or forfeit them, though it may still be worth speaking with a customer representative to see what they can do.

If you want to get sign-up bonuses on a credit card that you plan on switching to, check with your bank to see whether you’re eligible. Some cards don’t allow bonuses for existing customers.

The Takeaway

Requesting a credit card product change can be an easy way to switch to a new credit card without going through the full application process. Before you make any moves, however, take the time to confirm whether or not converting credit cards will impact your credit and whether you’ll be able to keep the rewards you’ve earned using your existing credit cards. After all, valuable credit card rewards aren’t something you want to lose out on.

FAQ

Does a product change reduce your credit score?

A credit card product change may affect your credit score if your issuer requires a hard credit inquiry to make the switch. This should only impact your score temporarily though.

How do I request a product change?

To switch credit cards, you’ll need to contact your bank or credit card issuer to determine whether you can switch the card you want. From there, it will inform you of the other steps you need to take.

What are the downsides of a credit card product change?

You may lose the rewards you’ve earned on your current card if you decide to switch credit cards. Your credit score could also be temporarily affected if your issuer conducts a hard credit check when you switch cards.


Photo credit: iStock/RgStudio



Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .


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