How to upgrade or downgrade a credit card

Thinking of ditching one of your credit cards?

Before closing the account, consider upgrading or downgrading your credit card instead.

Generally, you can upgrade or downgrade your current credit card to another card from the same company.

Maybe you’re tired of paying that $95 annual fee for a card you don’t really use anymore and want to upgrade to a no-fee card.

Or maybe you want to upgrade your basic cashback card to a premium credit card to help pay for your next honeymoon.

Downgrading or upgrading a credit card is also called a product switch because you switch from one type of card to another without closing your account.

There are pros and cons to switching products with the same credit card company.

You usually keep your current account and card number, for example, 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: Pros and Cons

Premium credit cards offer many advantages. Many offer awesome travel rewards, like free hotel nights, travel insurance, and airport lounge access.

They also earn rewards points at a higher rate than standard credit cards.

The biggest downside? High annual fees.

But if your income is higher than before — or you’re traveling more — it might be a good idea to upgrade from a simple cash back card to a premium card or travel rewards card.

Advantages

• Enjoy premium benefits. Premium cards often offer exclusive benefits and rewards, such as airport lounge access, travel credits, and TSA PreCheck/Global Entry credits.

• Easy to change. It is easier to change cards than to change companies. There is no application to complete, and your online login information and card number must remain the same.

• No firm credit check. Credit card issuers do a thorough investigation of your credit file when you submit a new application. You can usually get around this – and avoid an impact on your credit score – by upgrading your card with the same company.

The inconvenients

• Higher annual fees. Some premium cards cost up to $650 per year, although you may be able to get the first year fee waived. Make sure your budget can afford the annual fee and that it is worth it. Always understand the terms and conditions before upgrading 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 are not submitting a new application, you may miss the sign-up bonus.
• Your interest rate may change. If your current credit card offers an introductory rate of 0% APR, you may lose it by switching to a new card. Premium cards tend to have higher interest rates, so check that out before you switch.

Downgrading your credit card: pros and cons

Maybe you signed up for a high-end credit card a year or two ago, but now your budget is forcing you to reconsider, or you’re just not using all the benefits you pay for.

Instead of simply canceling your credit card — which can damage your credit score — you can simply call your card issuer and ask if they can downgrade you.

Advantages

• Low or no annual fees. Unless you’re a frequent traveler, it can be hard to justify an annual fee of over $300. Switching to a cheaper credit card can give your budget some breathing room.
• Less impact on your credit score. Downgrading a credit card allows you to keep your line of credit and your average age of credit. Closing the account, on the other hand, can temporarily lower your credit score, as it lowers your credit limit and increases your credit utilization rate.

The inconvenients

• No welcome bonus. Credit card companies don’t want to pressure you into upgrading to a cheaper card, so you’ll almost always miss out on potential welcome bonuses when downgrading.
• You may have 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 could lose your current rewards. Be sure to call your credit card company and ask what happens to any points or rewards you’ve already earned before downgrading your account. They might be able to roll over your benefits – or you might lose those points forever.

Limitations on Upgrading or Downgrading Your Credit Card

Many credit card issuers only allow you to upgrade or downgrade within a single card family.

Let’s say you have a Chase Sapphire Reserve card with an annual fee of $550. You cannot switch to a United Explorer card (with a $96 annual fee) or another co-branded card, even if both cards are issued by Chase.

You also usually cannot switch between a personal card and a business card, even if they are 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 this case, you will need to either cancel your account or keep your current card.

Does Upgrading or Downgrading a Credit Card Impact Your Credit Score?

Upgrading or downgrading your credit card will not negatively impact your credit score until your existing account is closed and your credit limit decreases.

Credit score models, like FICO, look at several factors to determine your credit score, including the age of the account, its current balance against the credit limit (credit utilization rate), and history payment from your account with the account.

The beauty of upgrading or downgrading your credit card is that all of these factors remain the same, so your credit score is not affected.

Closing your account completely or requesting a new card is another story.

For example, opening a new credit card usually involves a serious request, which can temporarily affect your credit score. Meanwhile, closing a credit card reduces the average age of your accounts, which can also have a temporary impact on your score.

How do you change your credit card?

You may 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 the options available to downgrade or upgrade your card.

Here are the customer service numbers for the nine major credit card issuers.

Rachel Christian is a Certified Personal Finance Educator and Senior Writer for The Penny Hoarder.