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Managing the credit cards in your wallet is a crucial component of maximizing award travel. It requires a careful assessment of each card to decide whether its benefits and points earned outweigh the annual fee and if it aligns with your current travel goals.
And if you've decided that a particular card in your wallet no longer supports those goals, that's okay. However, it might be advantageous to downgrade your card rather than cancel it outright. Here's when you should downgrade.
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Reasons to Downgrade or Cancel a Credit Card
You might want to downgrade or cancel a credit card for any number of reasons. These can include:
- A shift in your rewards strategy. You might prefer to focus on a different loyalty program to achieve a specific travel goal.
- Changes to a rewards program attached to the card. Perhaps the loyalty program loses your favorite transfer partner, or it otherwise no longer aligns with your overall rewards strategy.
- A reduction of bonus categories, benefits, or the points-earning power of the card. Your card might be less rewarding or perk-filled than it used to be.
- A change in personal circumstances. A new job or a change to the family dynamic can shift your travel goals or financial priorities.
- The fee outweighs the value proposition. You might simply feel that you aren't receiving as many benefits as you pay in annual fees.
- Moving to a new location. This can necessitate a change of preferred airline, hotel chain, or airport lounge membership.
- A new rewards card is entering the market. You might find a different card that aligns more closely with your travel goals and spending habits.
If you decide a card is no longer needed or has been made redundant due to new products entering the market, the next step is to decide whether to cancel it or downgrade it to another product with a lower (or $0) annual fee.
Related: Beginner's Guide to Building a Credit Card Application Strategy
Downgrade a Credit Card vs. Cancel a Credit Card
Deciding the fate of cards that don't make the cut can be tricky, as there are several things to consider.
You want to ensure you don't lose any miles and points if you close your card, while still being able to use and transfer points and miles in a way that offers a decent return. Perhaps most importantly, you need to consider how closing or downgrading the card will affect your credit score.
Is there a retention offer available?
Before deciding to downgrade or cancel a credit card, it’s worth calling the card issuer to see if there are any promotions or retention offers available on your card that might convince you to keep it. If the bonus provides enough value, it might make sense to keep it for an additional year.
If there are no promotions or retention offers available for you, there are a few things you'll want to weigh.
Can the card be downgraded?
Some cards, such as the Chase co-branded cards, cannot be downgraded or converted to a card from any other loyalty program or to an Ultimate Rewards-earning card.
Likewise, Amex cards that utilize the “Pay Over Time” option (balances may accrue interest charges) cannot be downgraded/swapped to regular credit cards and vice versa, nor can you swap between personal and business credit cards.
How will it affect my credit score?
Downgrading a credit card keeps your credit line open, so you won't have an impact on your average age of accounts. Plus, you're able to receive a new product without a hard pull on your credit report. In other words, downgrading a card can be advantageous if you want to keep your score as high as possible.
Will you lose perks or benefits that lower the value of your points/miles?
Downgrading can sometimes reduce the value of the points in your account. For example, if you downgrade from the Chase Sapphire Preferred® Card to the Chase Freedom Flex℠ without having the Ink Business Preferred® Credit Card or Chase Sapphire Reserve®, you cannot transfer Ultimate Rewards to travel partners, and points are only worth 1¢ per point through Chase Travel℠.
Will downgrading disqualify you from earning a new cardmember bonus on other cards?
Downgrading from one card to another may make you ineligible to receive a welcome bonus if you wish to open that card in the future. Each issuer has different rules and restrictions you'll need to navigate.
Related: Why You Shouldn't Cancel a Credit Card in the First Year
The Best Credit Card Downgrade Options
If you've settled on downgrading as your best option, which card should you try to get instead? Here are some of the most common options for American Express, Capital One, Chase, and Citi.
Downgrading American Express cards
When you downgrade an American Express card, you generally have a 30-day window after paying your annual fee to get a full refund. If you downgrade after that window, you will receive a prorated refund depending on the portion of the year you held the card.
If you hold an American Express card and want to downgrade, the best option might be the Blue Cash Everyday® Card from American Express. However, you won't be able to continue collecting and transferring Amex Membership Rewards. If you want to earn transferable points, you'll need to pay an annual fee.
If you hold an American Express card that makes use of the “Pay Over Time” option (like the American Express Platinum Card®), your options are a bit more limited. For example, if you have a personal or business card that uses the Pay Over Time option, your most affordable downgrade option would be the Business Green Rewards Card from American Express, which charges a $95 annual fee (Rates & Fees), and the American Express® Green Card, which charges a $150 annual fee.
Downgrading Capital One cards
A great example of when you might consider downgrading is when an issuer launches a new card. When the Capital One Venture X Rewards Credit Card launched a few years ago, I was already a cardholder of the Capital One Venture Rewards Credit Card. I really wanted a premium card, so I applied for the Capital One Venture X so I'd be eligible for a welcome bonus, and downgraded my Capital One Venture to the Capital One VentureOne Rewards Credit Card.
If you're unfamiliar, here's a quick side-by-side comparison of these three cards:
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- 5 Miles per dollar on hotels, vacation rentals, and rental cars booked through Capital One Travel
- 5 Miles per dollar on purchases through Capital One Entertainment
- 1.25 Miles per dollar on every purchase, every day.
$95
- 5X miles per dollar on purchases through Capital One Entertainment
- 5X miles per dollar on hotels, vacation rentals and rental cars booked through Capital One Travel
- 2X miles per dollar on all other purchases
$395
- 10X miles per $1 on hotels and rental cars booked via Capital One Travel
- 5X miles per $1 on purchases through Capital One Entertainment
- 5X miles per $1 on flights when booking via Capital One Travel
- 5X miles per $1 on vacation rentals booked via Capital One Travel
- 2X miles per $1 on all other eligible purchases
Your specific product change offers can be found in your account. You aren't always eligible for a product change, and if you are, there's no guarantee you'll be eligible for the card you might prefer. If you see an offer in your account, you can complete the process online with no need to talk to a representative. While you can technically switch to a cash back card, this isn't the best idea if you want access to Capital One's 22 transfer partners.
Downgrading Chase cards
Many of Chase's cards are co-branded with hotel and airline loyalty programs, such as Southwest Rapid Rewards and Marriott Bonvoy. The downside of these cards is that you cannot downgrade or product change them to a card that earns Ultimate Rewards or cash back.
However, if there is more than one card within the card family, you can downgrade to one of those cards. For example, you can downgrade the United Club℠ Card to the United℠ Explorer Card. Just be aware that you won't earn any signup bonus from the new card after downgrading.
The same rule goes for Chase-branded cards, which can only be downgraded to another card that earns Ultimate Rewards points. If you intend to downgrade the Sapphire Preferred, arguably the best option without an annual fee is the Freedom Flex — which offers solid earnings for a card with no annual fee:
- Earn 5% on up to $1,500 on combined purchases in bonus categories each quarter you activate
- Earn 5% on travel purchased through Chase Ultimate Rewards
- Earn 3% on dining at restaurants, including takeout and eligible delivery services
- Earn 3% on drugstore purchases
- Earn 1% on all other purchases
The card technically earns Ultimate Rewards points, but you need to hold an eligible Chase card — such as the Ink Preferred — to be able to transfer points to Ultimate Rewards travel partners or redeem points for more than a penny apiece through the Chase Travel℠.
The easiest way to downgrade is by calling the customer service number on the back of your card. You can tell the agent the card you want to downgrade to your card of choice. You may be able to process a card downgrade by messaging customer service through your online account. However, your mileage may vary with this method.
When you downgrade the Sapphire Preferred or any other type of Chase card, you'll keep the same credit card number, balance, credit line, and payment due date. Chase will not do a hard pull on your credit since you are keeping your existing account. You'll also keep any Ultimate Rewards you've earned, but as we mentioned, they won't be as valuable as when you held the Sapphire Preferred.
Related: Who Is Eligible To Get a Bonus on the Chase Sapphire Preferred® Card
Downgrading Citi cards
Citi will not let you downgrade within the initial 12 months of opening a credit card account. If you downgrade after the fee is applied, they will charge at least part of the annual fee on the card. Citi allows changes between select product families — you can potentially convert an AAdvantage credit card to a Citi ThankYou® Points-earning card, and vice versa.
You have a few options for downgrading Citi cards. The Citi Strata℠ Card, Citi Double Cash® Card, and Citi Custom Cash® Card are all no-annual-fee options that allow you to access all of Citi's 21 transfer partners. However, they will transfer at lower transfer ratios than if you held one of Citi's premium cards: Citi Strata Elite℠ Card, Citi Strata Premier® Card, or Citi Prestige® Card (not available to new applicants).
Here's a quick comparison of those three no-annual-fee Citi cards — along with their current bonuses for new cardmembers:
- 5X – Earn 5 ThankYou® Points for each $1 spent on Hotels, Car Rentals and Attractions booked on Citi Travel℠ via cititravel.com
- 3X – Earn 3 ThankYou® Points for each $1 spent in an eligible Self-Select Category of your choice (Fitness Clubs, Select Streaming Services, Live Entertainment, Cosmetic Stores/Barber Shops/Hair Salons, or Pet Supply Stores). Choose your eligible Self-Select Category on Citi Online or by calling customer service. The default Self-Select Category is Select Streaming Services.
- 3X – Earn 3 ThankYou® Points per $1 spent at Supermarkets
- 3X – Earn 3 ThankYou® Points per $1 spent on Select Transit purchases
- 3X – Earn 3 ThankYou® Points per $1 spent at Gas and EV Charging Stations
- 2X – Earn 2 ThankYou® Points per $1 spent at Restaurants
- 1X – Earn 1 ThankYou® Point per $1 spent on All Other Purchases
- Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases. To earn cash back, pay at least the minimum due on time.
Plus, earn 5% total cash back on hotel, car rentals and attractions booked with Citi Travel.
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- Earn 5% cash back on purchases in your top eligible spend category each billing cycle, up to the first $500 spent
- 1% cash back thereafter, plus, you'll earn unlimited 1% cash back on all other purchases
- No rotating bonus categories to sign up for – as your spending changes each billing cycle, your earn adjusts automatically when you spend in any of the eligible categories.
- Eligible spending categories are: Restaurants, Gas Stations, Grocery Stores, Select Travel, Select Transit, Select Streaming Services, Drugstores, Home Improvement Stores, Fitness Clubs and Live Entertainment.
- Special Travel Offer: Earn an additional 4% cash back on hotels, car rentals, and attractions booked on Citi Travel℠ portal.
Final Thoughts
Before you officially decide whether to cancel or downgrade a card, there are several things you should consider. Most of the time, this isn't just a simple decision.
We highly recommend speaking with a customer service representative to see if any promotions or bonuses are available before heading down either path. It's also worth exploring downgrade options before deciding to cancel a card, as cancellations can sometimes adversely affect your credit score.
For rates and fees of the cards mentioned in this post, please visit the following links: Business Green Rewards Card from American Express (Rates & Fees), Citi Strata℠ Card (Rates & Fees), and Citi Double Cash® Card (Rates & Fees)
