Why credit card users should change cards regularly

Two of the traits that credit card companies like to use in clients are inertia and loyalty.  A credit card issuer will in most cases reserve their best credit card offers only for brand new borrowers, and will actively discriminate against their current card holders.

New customer offers are not given out of a spirit of generosity.  The right credit card customers can be very lucrative to credit card providers over the duration of the account and this means that they are prepared to spend a large amount of money on marketing their credit cards to new customers.  However, many credit card companies have found that it is more cost effective to attract new customers through introductory offers rather than through spending the money on marketing.

This growth of new customer offers has proved to be a bright spot in the credit card market.  Many credit card holders can exploit this and get very good deals if they are prepared to regularly switch their card.  One example of this behaviour has become known as “stoozing” which is the process of opening credit accounts that allow for considerable interest free balance transfers and when the interest free period runs out to then open up a new interest free credit card account and transfer the balance of the account on to this card.  In effect this means that they are being allowed to borrow a considerable amount interest free.

Loyal customers do not need to apply for these offers.  These offers are usually open only to new customers, and old customers are rarely allowed to take advantage of them.  This means that people who wish to take advantage of the generosity of credit card companies are advised to fake disloyalty.  For example it is a very good idea to cancel unused credit cards, as an open account – even if it is unused will disqualify a card holder from a new customer offer.  It usually takes between six and twelve months for this card holder to be seen as a new card holder again.

There are other new customer offers that can be useful.  For example before a big life time event where there will be a large amount of spending, like a wedding or moving house, there are cash back cards that offer an accelerated cash back offer – sometimes as much as 5%.  There are also extra store card discounts, low interest rates on purchases and accelerated rewards.