Editor's Note: This story originally appeared on The Penny Hoarder.
Thinking about ditching one of your credit cards?
Before you close the account, consider upgrading or downgrading your credit card instead.
In general, you can upgrade or downgrade your current credit card to a different card with the same company.
Maybe you’re tired of paying that $95 annual fee for a card you don’t really use anymore, and you want to downgrade to a card with no fees.
Or maybe you want to upgrade your basic cash-back card to a premium credit card to help pay for your upcoming honeymoon.
Downgrading or upgrading a credit card is also called a product change because you’re switching between two different types of cards without closing your account.
There are pros and cons to making a product change with the same credit card company.
You usually get to keep your current account and card number, for instance, but you’ll miss out on welcome bonuses available only to new members.
Here’s everything you need to know about upgrading or downgrading your credit card — including how to make the switch.
Upgrading Your Credit Card: Overview
Premium credit cards come with lots of perks. Many offer impressive travel rewards, like free hotel nights, travel insurance and airport lounge access.
They also earn reward points at a higher rate than standard credit cards.
The biggest drawback? High annual fees.
But if your income is higher than it used to be — or you’re traveling more — it might make sense to upgrade a simple cash-back card to a premium card or a travel rewards card.
Upgrading Your Credit Card: Pros
- Enjoy premium perks. Premium cards often offer exclusive benefits and rewards, like airport lounge access, travel credits and TSA PreCheck/Global Entry credits.
- Easy to switch. It’s easier to switch cards than it is to switch companies. There’s no application to complete, and your online login information and card number should stay the same.
- No hard credit inquiry. Credit card issuers run a hard inquiry on your credit report when you submit a new application. You typically get to bypass this — and avoid a hit to your credit score — by upgrading your card with the same company.
Upgrading Your Credit Card: Cons
- Higher annual fee. Some premium cards cost as much as $650 a year — though you might be able to get the fee waived the first year. Make sure your budget can afford the annual fee and it’s worth it. Always understand the terms and conditions before switching to a premium card.
- No welcome bonus. Reward credit cards are known for their generous welcome bonuses that can be worth hundreds of dollars. But since you’re not submitting a new application, you may miss out on the sign-up bonus.
- Your interest rate might change. If your current credit card offers a 0% APR introductory rate, you might lose that by upgrading to a new card. Premium cards tend to have higher interest rates, so check that out before you switch.
Downgrading Your Credit Card: Overview
Maybe you signed up for a fancy premium credit card a year or two ago but now your budget is making you reconsider or you’re just not using all the perks you’re paying for.
Instead of canceling your credit card outright — which can damage your credit score — you can simply call up your card issuer and ask if they can downgrade you to a lower tier.
Downgrading Your Credit Card: Pros
- Low or no annual fee. Unless you’re a frequent traveler, it can be tough to justify a $300+ annual fee. Downgrading to a less expensive credit card can add some breathing room to your budget.
- Less impact to your credit score. Downgrading a credit card lets you keep your credit line and your average age of credit. Closing the account, in contrast, can temporarily drop your credit score because it lowers your credit limit and increases your credit utilization rate.
Downgrading Your Credit Card: Cons
- No welcome bonus. Credit card companies don’t want to incentivize you to switch to a cheaper card, so you’ll almost always miss out on any potential welcome bonuses when downgrading.
- You may need to wait a year. Many credit card issuers make you wait at least a year after opening a new account before you can downgrade your card.
- You might lose your current rewards. Make sure to call your credit card company and ask what happens to any points or rewards you’ve already accumulated before downgrading your account. They might be able to roll your benefits over — or you might lose those points forever.
Limitations to Upgrading or Downgrading Your Credit Card
Many credit card issuers only allow you to upgrade or downgrade within a single family of cards.
Let’s say you have a Chase Sapphire Reserve card with a $550 annual fee. You can’t downgrade to a United Explorer Card (with a $96 annual fee) or other co-branded card — even though both cards are issued by Chase.
You usually can’t switch between a personal card and a business card either, even if they’re from the same issuer.
It’s also important to keep in mind that not all credit card companies offer the same downgrade options.
Some cards may not have a downgrade option at all. In that case, you would either need to cancel your account or stick with your current card.
Does Upgrading or Downgrading a Credit Card Impact Your Credit Score?
Upgrading or downgrading your credit card won’t negatively impact your credit score so long as your existing account isn’t closed and your credit limit doesn’t go down.
Credit scoring models, like FICO, look at several factors to determine your credit score, including the account age, its current balance compared to the credit limit (credit utilization rate) and your account payment history with the account.
The beauty about upgrading or downgrading your credit card is all these factors stay the same, so your credit score isn’t impacted.
Closing down your account completely or applying for a new card is a different story.
For example, opening a new credit card usually involves a hard inquiry, which can temporarily ding your credit score. Meanwhile, closing a credit card lowers the average age of your accounts, which can also temporarily impact your score.
How Do You Switch Your Credit Card?
You might be able to upgrade or downgrade your credit card online.
Otherwise, call the customer service number on the back of your card and ask about available options for downgrading or upgrading your card.
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