So, you have had your Credit Card for some time now. You have been using the card responsibly and have not missed even a single payment. You have worked tirelessly and have built a decent Credit Score. This is just the time when you will be getting a call from your card issuing company for an upgrade on your Credit Card.
The sales team will offer you a higher tier Credit Card and will create a sense of urgency to make you approve your upgrade as soon as possible. They have their sales targets riding upon the Credit Card upgrade, but you have to take a rational, well-calculated decision. Before upgrading your Credit Card, you need to keep in mind some important conditions.
Whether you are using a SBI Cashback Card or HDFC MoneyBack Credit Card, look at these key points before accepting an upgrade offer.
- Check about the changes to your credit limit:
This is one of the most important considerations. In almost all cases, when the bank upgrades your Credit Card, they will also appreciate your credit limit. First things first, check about how much of an upgrade are they offering you in the credit limit. Not much point upgrading your Credit Card if you are not getting any increase in your credit limit. If you are getting a higher credit limit, check out the percentage increase you are getting. Do you need that high a credit limit? Can you indeed handle an upper credit limit? Consider your monthly income and expenses before making the decision. - Check about the changes to your interest rate: Just because you have never taken a Card Loan or ever carried a balance on your Credit Card to the next month, does not mean that you will never do that in the future. People have held and used Credit Cards for decades on a stretch and have never carried a balance, yet one fine day situation becomes such that they have to max out their cards and carry balances forward. It is always important to be aware of Credit Card Interest Rates. If you think that interest rate on your upgraded Credit Card is better than your current card, jump on the upgrade at once.
- Check about the changes to your card fees: Most of the entry-level Credit Cards come with zero fees, whereas high-level Credit Cards have costs attached. Well, these cards offer come packed with better reward points and exclusive features in lieu of Credit Card fees. Check if there are any fees involved in the new card!
If there is no fee involved, you can certainly consider the new card without a blink. However, if there is a fee involved, assess if you can make good use of benefits offered in exchange or not.
- Check about the acceptance of new card: Most of the entry-level Credit Cards come with either RuPay, Mastercard, or Visa as their payment processor. These cards have very high levels of acceptance, and almost all merchants will accept these Credit Cards. Besides, these cards have a standard 2% merchant discount rates. Higher-level Credit Cards generally have Diners Club or American Express as their payment processors. Both Diners Club and AMEX have much lower acceptance at merchants, primarily because they do not market their services except for very high-end merchants, and their merchant discount rate is almost double at 4%.
Are you ready to take a card that might not be usable everywhere? Yes, these cards have great flaunt value, but their acceptance is also a concern. So, choose wisely.
- Check about the changes to your card features: Entry-level Credit Cards come with only the basic features. Most of these cards only offer domestic transactions, and you are required to pay heavy charges for international transactions. If you are going to plan international travel in the foreseeable future, check if the upgraded card will provide you some advantages on international transactions and forex related charges. Similarly, some cards offer movie tickets or golf lessons and games. See if your new card comes with any of these features.
Also check out the features on online transactions of the new card before you finalize the upgrade. Another feature that you must consider is the fuel surcharge waiver. If you use your card for fuel purchases even once a month, ensure that your new card comes with a fuel surcharge waiver, or you will become subject to a completely unnecessary fee. One more thing is to check if your new card offers loans on card features or not!
- Check about the changes to your rewards program: Before accepting an upgrade offer, check the rewards program. You can save significantly with a better rewards program. For instance, Citibank Indian Oil Credit Card provides you very generous fuel-based rewards program. Unless you are being upgraded to Citibank Cashback Credit Card, you might not find the upgrade path very attractive. Similarly, the ICICI Bank Amazon Pay Credit Card is also one card which comes with reward points in form of Amazon Pay cashback usable on Amazon India website but its upgrade path is not as attractive, for anyone who doesn’t shop much online. So, keep a good view on the rewards program of new card.
- Check about the card protection features of your new card: Do you know that most Credit Cards come with card protection and cardholder insurance features. This means that in case of card misuse, the cardholder is not responsible for any unauthorised charges. Similarly, many cards provide life and accidental insurance to the cardholder in a number of cases. Once in a while you may even come across a card which offers health insurance at very affordable charges. Always make sure that when you upgrade your Credit Card, you do not lose out on any of these features.
Always keep in mind that Credit Card upgrades are optional, and no matter what the salesperson says to you, declining a Credit Card upgrade does not impact your CIBIL score in any manner. Similarly, choosing a Credit Card upgrade does not enhance your credit score in a positive direction unless you are getting a significant increase in your credit limit. This is a decision based mostly on the value derived from your current card vs. value on offer from your new card! So decide wisely.
