When does switching business credit card issuers make sense?
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Having more than one business credit card with the same issuer has some advantages for business owners. Account management is easier when you can do everything in one banking system, and you can more easily transfer rewards and balances between accounts. But maybe the rewards and perks of another card seem more appealing to you than any of the cards your current card issuer offers.
So, when you want a different card, are you better off sticking with your current credit card issuer or switching to a different issuer?
When to stick with your current business credit card issuer
There are a couple of reasons you might want to stick with your current card company. For one, you’re probably already getting card offers from that issuer. If you have a card from Capital One and have always paid your bills on time, for example, you’ve created a level of trust. Now the company may want to extend you another account — or make the account you have more appealing.
Here are your options if you stay with the same issuer:
Swap your credit card for a different one with the same issuer
Review the array of products that are currently available from your credit card issuer. It may offer a credit card with features that are much more attractive than when you first got the card. If it does, you may be able to switch your credit card for the one that better suits you.
For example, maybe you started your business with a Chase Ink Business Cash® Credit Card, but it doesn’t come with the travel-related benefits you want now. The Ink Business Preferred® Credit Card does, and you can request a switch.
This is also known as a product change and it can be a great way to get what you want, including lower annual fees, more appropriate rewards and perks or a lower APR.
After you’ve identified the more compelling card, call the customer service number and ask if you can trade your existing card for the one you want. Be sure to ask if it will add a hard inquiry to your file, though. Hard inquiries can temporarily lower your credit scores, so it’s best to be prepared.
Unfortunately, in most cases, you will not get the benefits associated with new account holders — such as a sign-up bonus or intro APR — when you switch products.
Keep your current credit card but upgrade the terms
Instead of switching accounts with the same issuer, an alternative method is to upgrade your original credit card. Call your issuer and ask if you can change the terms of your account.
For example, maybe the card you have is developed for people with bad or no credit, and the APR is high and the limit low. If you’ve treated the account well, you may ask for the APR to be lowered and the credit limit raised. If you have a secured credit card, find out if you can get your deposit back, transforming the card into an unsecured account.
The good news is that upgrading a card can prevent a hard inquiry from being placed on your file. The only exception could be if you ask for a higher credit line since issuers typically check your credit to see if you are eligible.
Get a new card from the same issuer
There are several advantages to having multiple cards with the same issuer, including:
- Credit pre-approval. When you use one account responsibly, the issuer may be confident that you can do so again with a second credit card. Therefore, you may receive a pre-approval offer for a card with a better rewards program than the one you have now.
- Convenience. Having all your credit card accounts with the same issuer can make your life easier. You would only have to visit one website or app to monitor activity and pay bills.
- Maximum rewards. You can often access complementary rewards and benefits by holding a combination of cards from the same issuer, often with a business card in the mix. The Chase trifecta and the Amex trifecta are examples of this strategy.
- Greater borrowing opportunities. When you have several well-managed credit cards with the same issuer, you increase your value as a customer. That can put you in a great position when applying for other products offered by the same institution, such as mortgages and car loans.
- Extra help when needed. With a long background of handling multiple credit cards responsibly, the issuer may be more open to giving you a break should you ever get into financial trouble and request assistance.
When to switch to a new business credit card issuer
Of course, you don’t have to stick with the same issuer you have now. There are plenty of good reasons to sign up for a card from a different bank:
- The right rewards. You may find a valuable rewards program that isn’t available with your current issuer. Every major credit card company has a slate of credit products from which to choose, so look for the rewards available from different issuers.
- A generous sign-up bonus. One of the best perks of signing up for a credit card is the sign-up bonus — and maybe you’ve spotted an offer from another issuer that looks too good to pass up. The best sign-up bonuses can be worth hundreds (or thousands) of dollars with the right redemption option. Just be sure the card itself fits your needs.
- Store loyalty program. When you make purchases at stores with a general-purpose credit card, you won’t get the discounts and deals available from a store credit card associated with a particular retailer. If you want to lower your shopping costs at a place you frequent often, a new retail card may be in order.
- Flexible travel benefits. The card you have may be co-branded with a specific airline or hotel brand, but now you want maximum flexibility when traveling. For example, you may have an American Airlines credit card issued by Citi or Barclays, but you’d like to fly more with Delta. American Express offers Delta Air Lines credit cards, so you might consider an Amex card to take full advantage of this airline’s benefits.
Consider the application process and requirements
Like the first time you applied for a credit card, you’ll need to complete an application with some key information about your business. Here are some common business credit card application requirements.
- Business name and contact: It’s perfectly acceptable if your business address and phone number are the same as your personal address and phone number.
- Business details: Some lenders may ask what industry you’re in, how long you’ve been in business or how many employees you have.
- Your position in the business: The lender will want to know who will be liable for any debt accumulated on the account.
- Your annual business income: If your business hasn’t generated income yet, you need to report your income as $0. There may also be an area to include your personal income that’s unrelated to your business.
- Supporting documentation: Lenders don’t always ask f, but they may request you provide them with information that proves you have a business. At this point, an EIN or tax ID number can come in handy.
Protect your credit as you add new cards
No matter where you get additional business credit cards, you can preserve your credit score with the right approach. Apply only for credit cards that are within your score range. Some are designed for people with particularly excellent credit scores, so check the requirements before applying. This way you can avoid being rejected and adding an unnecessary hard inquiry to your file.
Your credit scores may dip a little when you obtain a new credit card because it will shorten the length of your credit history. However, the negative effect will be short-lived if you keep the card and use it responsibly. Conversely, a new credit card can boost your score by providing you with more overall available credit, thus lowering your credit utilization ratio. This credit scoring factor accounts for 30 percent of your FICO score, second only to payment history.
If managing accounts from different issuers gets complicated, take steps to streamline your account management. After all, your credit card should be the least complex element of managing your business. Download the issuers’ apps to your phone and other mobile devices to check transactions as you please. Set up automatic bill pay so you never miss a payment.
The bottom line
There is no reason to only do business with a single credit card issuer, but if you want to stick with them, ensure that the relationship is always positive. When it is, your options for different cards with that issuer will remain open. And since your responsible card use will be reflected on your credit report, the wide world of credit from other issuers will be available, too.