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How to Switch to a Lower Interest Credit Card

If your credit cards are gauging you on the payments, what can you do about it? You can switch. Switching from an old credit card to a new, lower interest rate card can save you a lot of money. However, it also takes quite a bit of effort.

Here's how to switch from an old card to a new card with as little hassle as possible.

Compare Credit Card Offers

Start by collecting credit card offers. You know those pesky direct mail pieces you've been getting? Start putting them in a drawer.

Also, look online to see what kind of offers you can find. Print out the most tempting ones and also put those in a drawer.

After you've saved up one or two months' worth of credit card offers, go through them and see what the best offers you can find are.

Be Careful around Short-Term Offers

Many credit cards will offer terms like "0% for 6 months." It can be tempting to move your credit over to these companies just to save a bit of money in the short run.

The reality is, however, that most people never go through the trouble of shifting their money again after the six months are up. Credit card decisions shouldn't be made on a short-term basis, but on a much longer term outlook.

Also keep in mind that most credit cards charge a 3% balance transfer fee which could wipe out most of your short-term savings.

Pitfalls to Avoid in the Switch

When you make the switch, make sure you remember to switch all your auto-payment systems to the new card. For example, if you have your gas, electricity and Netflix subscription on your old card, make sure to switch them all to your new card.

Don't cancel your old card if it's your oldest credit card. Just keep it open with zero balance. Having an older card open shows you have a long credit history, which improves your credit.

Read Everything

Most importantly, read all the terms and conditions carefully. Understand exactly what happens when you switch credit cards, what happens during the introductory period and what happens from then on.

Understand all the fees, including fees you think you'd never have to pay (such as late fees). Don't make a decision until you understand all angles of the process.

Switching from one credit card provider to another isn't just a matter of flipping a switch. It often involves changing your credit card on many systems, reading several pages of documents, looking for fine print along with some careful thinking along the way. It's a lot of work, but if you're stuck in an expensive card right now, it's often worth the effort.