Take charge of your card
Many of us have credit cards issued by major banks. But, these cards are not a good deal.
The Consumer Financial Protection Bureau found that “the 25 largest credit card issuers charged customers interest rates of 8 to 10 points higher than small- and medium-sized banks and credit unions.”
And, these large banks often invest in fossil fuels, industrial agriculture, and other harmful projects.
So what can you do?
If you have credit card debt, don’t panic. Take steps to reduce your debt.
Look for a responsible credit card from a bank or credit union that is working to benefit their customers and communities. Here are several good options.
Transfer any balances to your new card, and pay them off as quickly as you can.
Guarding your credit rating
Unlike your bank account, getting a credit card is similar to getting a loan. The bank that issues the card will pay for your purchases up front, on the promise that you will pay them back by paying your credit card bill each month.
This means that switching credit cards may temporarily affect your credit rating. When you apply for a new card, the issuing bank will likely inquire into your credit history, which could temporarily lower your credit card score.
In the long run, how you use the credit card is more important for your credit rating than switching to a new card. Take these steps to minimize any impact:
Get a responsible card with a credit limit equal to or higher than your old card.
Do not charge more than 30% of your credit limit on your new card.
Pay your credit card bills on time — and pay in full each month if possible.
Follow these steps to cancel your old card — or keep it but stop using it
If you are planning a major purchase soon, such as buying a new house, or if you are a renter looking to move soon, you might want to wait until after these processes are complete before canceling a long-held or high-limit credit card.