So you\u2019ve been faithfully wielding a credit card with a $0 annual fee and a modest spending limit, but it\u2019s got a lackluster rewards program. It\u2019s served you well, but now you\u2019re enticed by the prospect of a credit card that promises impressive benefits. The allure of a\u00a0premium credit card\u00a0with perks like\u00a0concierge service, free hotel night stays and exclusive\u00a0lounge access\u00a0is undeniable.<\/p>\n
In fact, cardholders who say their annual fees average $100 or more have higher satisfaction with the benefits and rewards on their cards than customers who have cards with lower or no annual fees, according to the J.D. Power 2023 U.S. Credit Card Satisfaction Study.<\/p>\n
So it might seem wise to contact your credit card issuer and ask if your existing card can be upgraded to one with higher rewards. Upgrading \u2014 rather than applying for another credit card \u2014 might seem logical, especially because your card number will likely remain the same (so you won\u2019t have to change it in automatic payment accounts). But that\u2019s not always the smartest financial move.<\/p>\n
Rather than putting all your spending into a single upgraded card, consider the strategy of holding multiple credit cards. That way, you can bring in a new premium credit card with lavish perks without surrendering the simplicity of your trusty $0 annual fee card.<\/p>\n
Is it bad to have multiple credit cards? The notion of too many credit cards hurting your credit scores is generally a\u00a0credit myth. Here\u2019s why:<\/p>\n
Having multiple credit cards isn\u2019t just about expanding your wallet \u2014 it\u2019s a strategic move that can improve your\u00a0credit utilization rate.<\/p>\n
Holding multiple cards typically means your overall amount of available credit increases, (assuming your credit limit on your existing card remains steady). And assuming your spending remains steady, too, then multiple cards\u00a0lower the percentage of your available credit\u00a0that you\u2019re using.<\/p>\n
This ratio, known as credit utilization, can impact up to 30% of your credit scores depending on the scoring model being used, according to credit bureau Experian. A lower credit utilization ratio indicates responsible credit management, which in turn can boost your creditworthiness.<\/p>\n
It can be good to have multiple credit cards for practical reasons, such as providing a backup if your main card is lost or stolen. If you need to pause or cancel cards that were inside your wallet, that backup credit card might prove useful while you wait for replacements.<\/p>\n
Check out:<\/strong> How I stacked a new credit card with a\u00a0high-yield savings account\u00a0to save over $1,100 on a remodel<\/p>\n Most people intend to upgrade their card seemingly to earn more rewards. But often the act of upgrading \u2014 rather than applying for a separate card \u2014 robs you of the opportunity to earn rewards. Here\u2019s how:<\/p>\n Credit card companies often entice new customers with limited-time promotions like 0% APR periods, bonus points or waived annual fees.<\/p>\n Sometimes when you upgrade an existing card, you forfeit the chance to capitalize on those\u00a0introductory offers, which can provide substantial short-term financial benefits.<\/p>\n Many rewards credit cards often dole out certificates for things like\u00a0free hotel room nights, typically issued in tandem with your credit card\u2019s renewal.<\/p>\n Let\u2019s say you have a $0 annual fee hotel credit card that renews every September. Come October, you opt to upgrade your card, with your eyes on perks like that free night certificate. You\u2019d still have to wait nearly an entire year for that next September anniversary to get such a certificate.<\/p>\n Also see:<\/strong> 5 situations when using a credit card just to earn rewards isn\u2019t worth it<\/p>\n Just because a card has a high annual fee doesn\u2019t mean it earns better spending rewards than its low or no annual fee siblings. For example, Hilton\u2019s In that case, you might just hold both credit cards \u2014 one for the everyday spending rewards, and one for the VIP status at Hilton properties.<\/p>\n Read:<\/strong> Why the American Express Platinum Card fee hike may really be about airport-lounge overcrowding<\/p>\n That said, there are some situations where a credit card upgrade makes sense.<\/p>\n Multiple cards mean more accounts to manage, more passwords to remember and more bills to pay. If you\u2019d rather keep it simple, then upgrading might be a better move.<\/p>\n Sometimes banks even promote upgrade offers similar to introductory offers. Taking advantage of such an offer can give you a windfall of points.<\/p>\n Plus, applying for new cards can have a temporary\u00a0negative effect on your credit scores. While new credit cards can help in the long run, applying for a new card might not be ideal depending on your situation.<\/p>\nUpgrading can rob you of reward-earning opportunities<\/strong><\/h2>\n
You\u2019ll likely miss out on introductory offers<\/strong><\/h4>\n
You might miss out on annual rewards<\/strong><\/h4>\n
Multiple cards typically mean more rewards<\/strong><\/h2>\n
\n HLT,
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\n top-tier card offers include Diamond elite status, resort credits and a free night certificate, but its rewards on spending outside of travel are pretty lackluster. Conversely, other Hilton credit cards don\u2019t offer as high a value at Hilton hotels, but they do offer a high rewards rate on everyday spending categories including U.S. restaurants, supermarkets and gas stations.<\/p>\nWhen upgrading your credit card makes sense<\/strong><\/h2>\n