4 Signs You Need to Upgrade Your Credit Card

If you've been using the same credit card for a long time, it could be a good idea to think about an upgrade. When you upgrade your credit card, you switch to a card with more benefits, and often (but not always) a larger annual fee.

You might not be sure about spending more money for a credit card, especially if you've only used no annual fee cards until now. But you could end up saving more money this way. If you're on the fence, here are the biggest signs you need to upgrade your credit card.

1. You've improved your credit score

If your credit score has taken a leap forward since you got your card, you could probably qualify for a better one.

This is especially true if you're now in the good credit range (a FICO® Score of 670 or higher). Credit cards for consumers with lower credit scores tend to have limited benefits. But once you have good credit, you can normally qualify for some of the very best credit cards.

You've done the work to improve your credit score. You should definitely take advantage of the benefits that come with it. Even if you want to stick to no annual fee credit cards, there are much better options available for consumers with good credit.

2. You're spending more

One of the advantages of more expensive credit cards is that they have higher rewards rates. Credit cards with larger annual fees typically earn more in cash back or travel points.

That can make a big difference. And the more you spend, the more of a difference it makes. That doesn't mean you should spend more just to earn rewards, but if your bills have gone up, then it's worth looking for a credit card that will help you maximize your rewards.

3. You're traveling more often

Most travel credit cards charge annual fees, but they also have perks that can help you save money on your trips. As you'd expect, the travel cards with the highest fees also usually have the longest lists of benefits. Here are some examples of perks available with travel credit cards:

• Complimentary access to airport lounges
• Free checked baggage
• Spending credits for travel purchases
• Elite status in airline and/or hotel loyalty programs

If you're traveling more than you used to, consider upgrading to a travel credit card. Or, if you already have one, you may want to see if there's one with even more perks.

4. You want more benefits

Upgrading your credit card doesn't need to be a complicated decision. If you just want more features than your current card offers, then it makes sense to look for upgrade options.

There are lots of credit card perks out there. Start by figuring out what you're interested in, such as a higher rewards rate or luxury travel benefits. After that, you can start narrowing down the list of cards that fit your needs.

How to upgrade your credit card

There are two ways to upgrade your credit card. The traditional option is to call your card issuer and ask to switch to another card in its lineup. There are a few drawbacks to this method:

• You're limited to the credit cards that your card issuer has available.
• You most likely won't be eligible for any welcome offer available with your new card.

For example, let's say you choose a card that offers 75,000 bonus points for spending $4,000 in the first three months. Welcome offers like these are normally only available to new cardholders. In that case, if you upgrade to that card, you won't be eligible.

The other option is to pick the new card you want and apply for it as a new cardholder. You can keep your old card, or, if it has an annual fee, you can downgrade it to a no annual fee card.

I almost always go with the latter method. By applying for the card you want, you're eligible for the welcome offer. That's important, since these often give you the opportunity to earn a large amount of points or cash back. You're also not limited in terms of which cards you apply for. It's up to you how you upgrade your credit card, but make sure to compare your options so you can choose the one that benefits you the most.