4 things you should do before upgrading your plastic

Posted on Friday, March 2, 2018 - 19:15

Whether you are making an upgrade to the god of all credit cards that glimmers with its all black cover or simply switching to a credit card that is easy on the finances, there are four essential things you will have to do before you change your plastic. Make the most of shopping around and comparing credit cards that will give you the best value instead of digging you into debt.

Know the why not the what

Before you set out to go on a comparison site to look for a credit card that will match your financial needs and has an affordable interest rate, you will have to know why you need a new credit card. This seems like a pretty straightforward thing, but if you could take a current peak into the contents of your wallet and find that you have more than one credit card ask yourself if you need another one. You will also have to look at how your new plastic upgrade will benefit you. It’s best if you look at the credit features and see if it will work hand in hand with your finances or create debt.

Will you be able to meet what is expected of you?

A credit card can be an excellent source of convenience that helps ease the financial burden on Australian households. However, if you see it as a quick fix it can create more problems than anticipated. It is important that you check the features of your card and look beyond the low interest rate it offers. Check to see if you will be able to meet the repayments without defaulting.

A recent report showed that a total of 6.2 million Australians have missed a payment, which can easily lead to a bad credit mark if it is not paid within 60 days. The average repayments on credit cards were $1,604 in 2017, which was an increase of $96 from 2015.

If you default on payments it can leave your credit report with a bad mark that can affect how future lenders see you.

Clean up your credit report

If you want your application for a new credit card to go smoothly, checking your credit report should be the first stop. Credit card providers are less likely to give you a credit card upgrade if your report has holes and bad marks against it. If there are any outstanding payments that are due or debt that you need to clear on another card, it will be advisable to take care of that first before switching cards. If you are no longer using a card, it’s best to can cancel it, but you will have to be aware of fees that come with cancelling a card.

If you don’t understand don’t sign

The purpose of credit card is for it to compliment your spending habits and help you have a better grip on your finances. If you don’t understand the terms and conditions or repayment plans that come with your card then don't sign up anything. You can speak to your credit provider or a financial advisor who will be able to better advise you when it comes to finding a card that works for you rather than against you.

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