Ask LH: Is It Worth Switching Credit Cards For Better Rewards?

Dear Lifehacker, Should I change to a different credit card just because it has a better rewards program? I currently have no credit card debt but swapping cards takes effort. Are the rewards different enough to justify a switch or are they all pretty much the same? Thanks, Credit Cruncher

Dear CC,

If you're completely debt free, there's no reason to stick with a financial institution you're not happy with. Switching banks isn't difficult and you can easily review the rewards they offer on their websites. The key is to define what "better rewards" means to you personally.

The pros and cons of the various rewards programs are entirely subjective — do you want free travel insurance? Flight vouchers? Access to premium products and bonus offers? The perfect rewards for one customer could be completely useless to another. Determine the type of rewards you're likely to actually utilise and choose a card accordingly.

Alternatively, you might want to consider incentives outside of rewards programs. Paying no annual fee could save you money in the long run, for example. This goes doubly if you're unlikely to take advantage of the rewards anyway. For a good starting point, check out our monthly Ratehacker column for suggestions on current good deals.

If any readers (or bankers) want to spruik the benefits of their chosen credit card, let CC know in the comments section below!

Cheers Lifehacker

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Comments

    My comments are about FF points specifically, where I've found the best gains are to be had in sign-up bonuses. Many card issuers will give you a sign-up bonus of 30k-70k (sometimes up to 100k) FF points to get you carrying their FF rewards card.

    You can switch cards once or twice a year and rack up some quick points that way. It does affect your credit rating, so beware if you're planning to apply for a mortgage or car loan any time soon.

    I've gotten to the point where I keep a list of all my registrations (PayPal, Amazon, Netflix, whatever) and I can update them all online in an hour or two to the new card. Switching cards isn't difficult if you're organised.

    Another tip - if you're paying credit card interest, rewards cards probably aren't for you.

    I think you need to also consider the hit on your credit rating every time you apply for a card.

      Good point there. The issue is not so much with the application itself but rather if you have "too many" applications in a "short period of time".

      There are no clear definitions for the terms "too many" and "short period of time" and each of the three credit reporting companies will have their own definitions (which are a trade secret) and how their algorithm (which is also a trade secret) will use this in the calculations of your credit score.

      Last edited 11/07/17 12:32 pm

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