How to Downgrade Your Credit Card

How to Downgrade Your Credit Card article image.

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Some credit card issuers let you change or downgrade a credit card without closing your account. It can be a good option if your card has a high annual fee, benefits you don't use or another card offers a rewards program that better aligns with your spending.

Benefits to Downgrading a Credit Card

Downgrading and upgrading cards is also called a product change, as you're swapping the credit card product without closing your account. As a result, you can keep your credit line and avoid the potential impact that closing a card can have on your credit scores.

Often, people downgrade a card because their current card's annual fee is coming due soon. They might feel like the card isn't worth its fee anymore, but they also don't want to close the account altogether. If you downgrade to a card that doesn't have an annual fee, you may be able to avoid the fee or get a recently charged annual fee refunded.

You may even find that the card you swap to is more suitable for you. Maybe it has a more generous rewards program, or offers bonus rewards in a category that you're spending more money in right now. Even if your new card has lower rewards rates, you might wind up earning more overall after you account for the lack of an annual fee.

Drawbacks to Downgrading a Credit Card

There may be downsides to downgrading a credit card as well. For instance, if your current card has an introductory 0% annual percentage rate (APR) offer, the intro promotional period might be cut short. Ask a card issuer representative how a product change will impact your account's standard and promotional APRs to verify their policy before you make your decision.

Downgrading to a lower-tier card could also mean you'll lose your original card perks, such as access to statement credits, primary rental car insurance and airport lounges. Additionally, you won't necessarily get intro bonus offers for the new card.

And, if you earned an intro bonus on your original card and then try to downgrade it to avoid paying the first annual fee, the card issuer may claw back your rewards if it suspects you're gaming the system.

How to Downgrade Your Credit Card

Credit card issuers don't have to offer product changes or comply with your request, and each company may have different policies and rules.

If your card issuer allows downgrades, you can make the request by calling the card issuer and asking for a product change. Some issuers may also give you an option to request the downgrade online or send you a product change offer in the mail or online.

Review the issuer's credit cards ahead of time to see which card you want to switch to. Your options could be limited to cards within the same "family." For example, if you have a co-branded airline card, you might only be able to change to other co-branded cards with the same airline.

When you request the change, the issuer's representative can tell you about the next steps in the process. You'll have to wait for the new card to arrive in the mail, but you may still be able to use your old card in the meantime.

When downgrading isn't an option, you may have to close your account and apply for a new card. However, there's no guarantee that an issuer will approve your application for the new card. If your current card has rewards, you may also want to review the program rules to ensure you won't lose the rewards in your account when it's closed.

Does Downgrading a Credit Card Affect Your Credit Score?

Downgrading a credit card won't directly impact your credit score if your account isn't closed and your credit limit doesn't change.

Credit scoring models, such as FICO, consider various factors related to credit card accounts, including when the account was opened, its current balance compared with the credit limit (credit utilization rate) and your payment history with the account. However, the specific card, interest rate and rewards program aren't part of your credit report and don't impact your credit score.

Closing the account and applying for another credit card could impact your score in several ways, however. For instance, closing a card can lower your overall available credit, which may increase your utilization rate and hurt your scores. Opening a new card could lead to a hard inquiry and lower the average age of your accounts, which could also hurt your scores.

Compare Options Before Downgrading or Applying

Whether you're downgrading or applying to a different card, you can compare your options and choose the card that will be the best fit. You can review cards in the Experian CreditMatch™ marketplace. If you're going to apply for a new card, you may want to check your credit score for free first.

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