Why Apply For A New Credit Card?

The explosion in credit card use over the last couple of decades means that by now the majority of UK adults carry at least one card. Indeed, many people carry several, even if some of the accounts are basically dormant.

It's also well known that possessing several cards can lead to trouble, with several small balances easily adding up to a large one which is difficult to cope with. With this in mind, why would anyone bother applying for yet another credit card?

The first thing to consider is that, as in many areas of financial services, new customers will tend to get better deals than loyal, long term ones. In the quest for new business, card issuers will try and entice people into applying for a new card by offering benefits that won't necessarily make the company any money at first, with the intention of recouping the investment later on once the introductory offers have expired.

In contrast, existing customers are often taken somewhat for granted and aren't likely to receive any benefits beyond the minimum already offered by the account. It's even quite possible that the offerings of your card will deteriorate over the years, with a slow but steady rise in interest rates common for established cardholders.

Further, increased competition in the last few years has led to card offers becoming more and more attractive. If you applied for a cash back card in the past you were likely to receive a miserly rate of 0.25% or 0.5%. These days, a 1% cash back rate is the bare minimum you can expect, with some remarkable introductory rates available which maybe point to better standard rates in the future.

Similarly, rewards programs have become more generous, balance transfer offers more lengthy, and 0% purchase periods more extensive.

All this adds up to a compelling reason to upgrade your credit card, especially given the ease of comparing and apply for cards online. But to be safe, don't go overboard with applications and make sure you clear the balance on your old card and cancel the account so that you're not tempted to build up debts across multiple cards.