Can I change a credit card after the introductory period has run out?

A credit card with an introductory period usually offers a low interest rate for a period of some months, usually between three and twelve months. However, after this time the credit card will revert to a higher interest rate, usually one that’s higher than the standard rate. It is often asked whether a person can change his or her credit card after this introductory period has passed.

There is usually no penalty for moving a card balance after an introductory period, unlike other loans and home loans. However, there are some costs associated with such credit card transfers, the direct cost of a balance transfer fee and the indirect cost of a lowered credit rating.

The first cost is the balance transfer fee, charged by the bank issuing the new credit card to cover the administrative costs involved. This fee is generally assessed as a percentage of the balance that will be transferred between the two credit cards. For example, a card may assess a 2% balance transfer fee, so if there is a $10,000 balance being transferred, the fee will be $200. Some balance transfer fees are capped at a certain balance, so a $5,000 fee limit will mean the $10,000 balance will be charged a fee of $100, while a 1.5% fee may look lower but without a capping threshold will cost $150.

These fees will build up rapidly if a person constantly changes credit cards, particularly if the interest free period is only for three months.

Another cost of transferring cards frequently is the borrower’s credit rating, which can take a hit from the number of credit card applications made. Credit card companies do not like seeing a person apply for a large number of cards over a short time period. This can be for a number of reasons, but in particular it’s seen as a warning sign of the borrower being in financial trouble.

Although a borrower taking advantage of a series of low interest rate introductory offers does not meet this criteria, their circumstances can look very similar. For this reason, his or her credit rating will suffer unless the applications are spaced more than a few months apart.