Credit Card: How to know you are ready for a credit card upgrade?

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Updated: September 28, 2019 10:08:32 AM

Do you think you're ready for a credit card upgrade? Read on as we discuss a few signs which show you might just be.

credit card, credit card upgrade, how to get a credit card upgrade, hdfc credit card upgrade, SBI credit card upgrade, credit card payment, credit card status, credit score, Credit Utilisation RatioIf you’ve gotten several pay hikes or landed a promotion ever since you got your current credit card, it’s possibly time for an upgrade.

When was the last time you got a credit card? Well, if you cannot really remember, it’s maybe about time that you start considering getting a new and upgraded card. Why, you ask? One of the many reasons could be that your old card may not provide as many benefits that an upgraded card might. In all likelihood, an upgraded credit card will come with a number of additional benefits like extra cashback, more reward points, etc. apart from a wide range of perks and privileges like complimentary lounge accesses, air miles (that can be redeemed for discounted flight tickets among other perks), free travel insurance cover, “members only” discounts and offers at malls, hotels, movie theatres and restaurants – things that can help you save a lot more while giving you some joy and peace of mind as well!

In addition to all the extra benefits and features, you may also be eligible for a higher credit limit with a new card. This would ensure your Credit Utilisation Ratio (CUR) remains low even if you go for controlled overspends occasionally (like when you’re booking flight tickets for the family). As you might already know, a CUR of less than 30% bodes extremely well with your credit history and helps you maintain a great credit score.

However, do you think you’re ready for a credit card upgrade? Read on as we discuss a few signs which show you might just be.

1. Your income has increased

If you’ve gotten several pay hikes or landed a promotion ever since you got your current credit card, it’s possibly time for an upgrade. Because, your existing credit card’s low credit limit might not be sufficient to accommodate your increased spending capacity, thanks to the growth in your income. Also, its limited benefits may not be anywhere close to incentivising a majority of your card spends.

2. Your spending patterns have changed

Spending patterns change with time, and so should your credit card. The card that was beneficial to you until a few years back might not make any sense now because of your current spending pattern. For example, your expenses as a bachelor will not be the same as your expenses once you get married and start a family. Similarly, you might drive to work these days (while you used to take public conveyance earlier), and should now consider going for a credit card that waives off surcharges on fuel refills. The same can be said about your current travel patterns. You may be, for example, flying to international destinations twice a year with your family, and hence would benefit a lot from an air miles credit card, and not just a one that gives 2% cashback on select grocery spends.

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3. You’re a credit card pro!

Not everyone who has a credit card knows how to maximise its benefits. But if you’re someone who has been using his credit card for a while, has never missed a payment deadline (hence paid any interest charges or late payment fees) and knows how to intelligently boost his savings on regular spends using card benefits – well, kudos for that! That being said, you might be saving much more if you were to use an upgraded card that comes with a wider range of benefits, perks and privileges. It shouldn’t be difficult for you since you’re already well-versed with the rules of the game!

4. You’ve consolidated your financial base

Many among us who are compelled to overspend on their credit cards while tackling a financial emergency – at times to such an extent that they struggle to repay the dues in time and end up accumulating avoidable debt. However, if you have in place an adequate emergency fund and a comprehensive health insurance cover, you’ve simply minimised the possibility of over-relying on your credit card during crunch times. As such, you too should consider going for an upgraded credit card to avail greater benefits.

5. A couple of other important pointers

# Annual fee: Well, upgraded cards in most cases will also involve an annual fee. However, you’ll be well-advised to go for such a card if you think the benefits justify the fee, or if you get something extra in return like bonus air miles. But don’t shut an option down just because it charges a fee, try to do a cost-benefit analysis. You might realise that if you avail some of the benefits and privileges of the card (like complimentary travel insurance, free movie tickets every month, etc.), you’ll save up way more than what you paid as annual fees. You can always request your bank to waive off or give a discount on the annual fee. Depending on your relationship with the bank, they might actually agree. Lastly, banks at times set minimum spending targets that need to be met to avoid paying the annual fee. If the spending targets are within your budget for credit card spends, you’ll automatically qualify for a fee waiver.

# Understanding your requirements: Closely analysing your lifestyle requirements while keeping a tab on your budget lies at the heart of a great credit card choice. So if you’re looking to upgrade your card, identify your prime spending areas first (flight tickets, groceries, online shopping, etc.) and then try to match the card benefits to them (air miles card, cashback card, reward points card, etc.). However, do read the fine print and intelligently gauge the cost of availing these benefits, like annual fees, spending targets, eligible merchants, so on and so forth. Most importantly, never breach your budget just to avail maximum benefits.

These tips will go a long way while you set out to make the most of your credit card.

(The author is CEO, BankBazaar.com)

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