Should You Upgrade or Downgrade Your Credit Card?

A woman smiles as she uses her phone and holds her credit card above her notebook while having breakfast outside.

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After the past year's travel restrictions and shifts in shopping habits, you might not be using your credit card quite the same way you used to. In fact, U.S. consumer spending on food services and transportation plummeted by a combined $360 billion in 2020, according to the Bureau of Economic Analysis and World Data Lab analysis.

As a result, you might be considering saying goodbye to a credit card with a high annual fee that rewards you for spending habits you've left in the past. Or you may be looking for a new card that offers amped-up benefits for your future plans as the economy begins to reopen. Either way, it could be the right time to make a change to the plastic in your wallet. That doesn't mean you have to cancel your current credit card, however. Instead, consider a credit card upgrade or downgrade from your current issuer. Doing so could help you tailor your credit card to your lifestyle and habits, all while protecting your credit score.

What Is a Credit Card Product Change?

When you upgrade or downgrade your credit card with the same issuer, the card company may consider the process a "product change." With a product change, you typically switch your current card (and the fees, terms and benefits attached to it) to another card within an issuer's "family" of cards. Your account and card number usually stay the same.
Accounts typically need to be open for one full year before upgrading if the new card includes a higher annual fee, but you may be able to downgrade before the one-year mark. If you downgrade to a card with a lower annual fee, you may be able to have the annual fee fully or partially refunded. Keep in mind, however, that downgrading a card you haven't had long could cause you to forfeit perks with the original card, such as an introductory 0% APR period or welcome bonus.
Card companies have different restrictions and allowances when it comes to product changes. In general, though, don't expect much flexibility if you want to switch a business credit card to a personal one or change a charge card to a credit card. Even though standard product changes usually stay within families of credit cards, it doesn't hurt to ask your issuer for an exception if you have your eye on a different card it offers. Keep in mind that the issuer may be more willing to consider your request if you've already logged a reliable payment history with your current account.

When Should You Upgrade Your Credit Card?

Upgrading your credit card might be a good move if you find yourself spending in certain categories that could garner more rewards with a higher-tier credit card. For example, you might have a card with no annual fee and scant cash back on spending, but you want to start claiming rewards for your newfound love of delivery food services. If another card in your current card's family offers better incentives for takeout-specific spending, you can potentially snag increased rewards with an upgrade (if you don't mind paying an increased annual fee).

Your credit card issuer may require your credit score and other financial factors to be in good shape before considering you for any higher-tiered cards; however, an excellent payment history with your current issuer might help give you more flexibility and may not even result in a credit check. If you're not sure where your credit score stands, you can check it for free through Experian.

When Should You Downgrade Your Credit Card?

Alternatively, maybe you have a bells-and-whistles card that has been collecting dust in your wallet while still demanding a sizable annual fee. You may have been able to justify a travel rewards card's annual cost before, but if you're not staying in hotels or booking flights and don't plan to in the future, those spending categories may simply not be practical anymore. In that case, you may consider downgrading to a card without an annual fee or one with a lower fee that offers rewards or cash back that aligns better with your current spending habits.

If your card's family has a suitable version, downgrading to a no-annual-fee option can even justify keeping an irrelevant account open since it won't cost you anything to maintain it.

Will an Upgrade or Downgrade Affect Your Credit Score?

You may be wondering, why bother with a product change when you could simply apply for a new rewards card or cancel the account with the high annual fee? Since a product change keeps your original account open with your issuer, it can be better for your credit score than closing an account or applying for a new one. Let's take a look at how a credit card upgrade or downgrade can influence your credit—and, consequently, your financial appeal to future lenders.

  • Credit utilization: An important factor in your FICO® Score is what's called your credit utilization ratio, which measures how much of your available credit you're currently using on your credit cards. Keeping this ratio low is vital for a healthy credit score; experts recommend not letting your usage exceed 30%. When you close an account, you lose that card's available credit line, which can cause your utilization to rise, particularly if you're carrying balances on other cards. Monitoring your credit regularly can help you see where you stand and how much leeway you have with your credit utilization.
  • Credit history: The length of your credit history factors into your credit score, and a longer history of managing credit responsibly looks better to lenders. Closing an account—especially one you've had open for a while—means your credit age can take a hit and negatively influence your score. The good news here is if you close your account in good standing (meaning your account is up to date and you haven't missed payments), it may remain part of your credit history for up to 10 years.
  • Hard inquiries: Virtually anytime you apply for a new loan or line of credit, the lender "pulls" your credit report to inspect your creditworthiness, which adds a hard inquiry to your credit report. Hard inquiries can cause your score to drop a few points and can affect your score for up to 12 months. Your current issuer may or may not pull your credit for a product change, but if you apply for a new card, you most likely won't be able to avoid an inquiry.

How to Upgrade or Downgrade Your Credit Card

Your card issuer may send you a targeted upgrade opportunity with instructions on how to make the change. Or, you can simply dial the number on the back of your credit card and ask the customer service representative about a product change. You might find guidance online, but calling the card issuer directly is the simplest way to determine your eligibility for upgrades and downgrades as well as which cards are available. If you've already done some browsing and have a card in mind, you can inquire directly about that card; if you're unsure, tell them your goals for the change and ask what your options are.

When requesting a product change, consider asking your card issuer to lower your interest rate. They may consider it depending on your credit and other factors, even though it's no guarantee
The switch to the new card typically happens quickly, though the company will have to send you the new physical card. And because your account and card number typically remain the same, there shouldn't be any difference on your credit report unless your credit limit changed significantly. It's possible that the issuer will pull your credit report for a product change, so it's a good idea to check with the representative about this. If the issuer plans to change your card number, don't forget to adjust that information for any recurring bills you have assigned to the original card.

Other Considerations for Your Credit Card Upgrade or Downgrade

Keep in mind that you might not be eligible for certain incentives, such as an intro bonus, welcome offer or 0% intro APR, when you upgrade or downgrade to a different card in the same family. Additionally, points or miles earned on your original card might transfer to your new one, but confirm with your issuer before making the change. If you stand to lose rewards by upgrading or downgrading, you may want to cash in any points or miles before signing up for the new card.

A downgrade doesn't have to be a demotion for your wallet any more than adding a fancier rewards card is automatically an improvement. Your spending habits will define the best cards to suit your lifestyle, so you need not feel anchored to the same card if it no longer serves you. Credit card companies want to earn—and keep—your business, so it's wise to look at all your options when you're ready to earn more (or spend less) on the plastic in your wallet.