High Annual Fees
Travel is restricted, restaurants are shuttered, income is tight. These, and other factors, may make you regret opening the credit card (the one with the high annual fee) that you have in your wallet. It may not seem worth it for you to hold onto the credit card and keep paying the high annual fee, without racking in travel rewards to make up for this expense.
However, you despise closing the card for fear of hurting your credit.
Downgrading my credit card
Luckily, most credit card issuers offer an alternative option (other than closing the account) that helps get rid of a high annual fee that you don’t want to keep paying.
By downgrading your credit card to a credit card that has a lower annual fee or no annual fee, you save yourself that headache. Once you downgrade, you no longer have to pay the high annual fee of your credit card. You will only have to pay the annual fee of your new card, if there’s any at all.
Saving your credit fall
Even more so, in contrast to your score going a bit bad by closing an account, your credit will not be impacted negatively by downgrading to a lower annual fee card.
When you downgrade a card, nothing will change on your credit report. Your account will show on your credit report with the exact same credit history and the exact same credit limit as it did until now. Downgrading a credit card is just an internal product change that is done on the credit card issuer’s level. The credit bureaus will never know about it.
Additionally, no credit check is done when you product change or downgrade a card.
Con- Impact on your rewards
Downgrading is mostly a great step to go for. What may be a downside is the way your rewards transfer to the new card. You will not lose your rewards by downgrading, but the value of the points and the points rules will be adjusted to match the value and the points rules of the card you’re downgrading to. For example, with the Chase Sapphire Preferred you have the option to transfer your points to a partner airline or hotel. But if you downgrade the card to the Freedom Unlimited then you will lose the option to transfer your points to a partner airline or hotel etc.
Welcome bonus while upgrading or downgrading
Welcome bonuses are usually only available for new cardholders. If you upgrade or downgrade a credit card, you will not receive a welcome offer (unless you are targeted for a special upgrade offer).
Downgrading and the Chase 5/24 rule
Chase has a famous rule which is known as the Chase 5/24 rule. What the basic rule means is that if you opened 5 or more cards within the last 24 months, you cannot get approved for a new Chase card.
Downgrading a card is not considered opening a new credit card and it will not count as a new credit card for the 5/24 rule.
How to downgrade?
To downgrade a Chase credit card, call the number on the back of your card to speak to a rep. In most cases, the downgrade will be approved.
The card number on the card will stay the same. Therefore, once the downgrade has been processed, until you get your actual new card, you can use your old credit card with the terms of the new card.
The CVV and expiration date, however, will change.
When to downgrade
With Chase bank, you have 41 days to downgrade the card from when the previous annual fee has been billed, and you’ll be refunded for the full annual fee. If you downgrade after the 41 days, you will usually (not always) get a prorated annual fee refund (past 41 days prorated refunds are only offered if you downgrade a card, not if you close it).
Rule: You can only product change a card after the first year of opening the account.
So, what can I downgrade to?
Let’s go through the downgrade options for Chase cards.
Sapphire Reserve ($550) and Sapphire Preferred ($95)
- Sapphire Preferred ($95)
- Freedom Unlimited ($0), even if you already have a Freedom card.
- Freedom Flex ($0), even if you already have a Freedom card.
- Sapphire ($0), which is only available via product change.
Chase Ink Preferred ($95)
You can downgrade the Chase Ink Preferred to any of the following cards:
Chase United Club ($525) or United Explorer ($95)
IHG Rewards Club Premier ($89)
Marriott Bonvoy Boundless ($95)
Chase Southwest Personal cards
You can downgrade any Southwest Personal credit card to any card within the Southwest Personal family:
- Chase Southwest Rapid Rewards Priority ($149)
- Southwest Rapid Rewards Premier ($99)
- Southwest Rapid Rewards Plus Card ($69)
Chase Southwest Business cards
You can downgrade any Southwest Business credit card to any card within the Southwest Business family:
Chase British Airways card ($95)
Update: The British Airways Rewards credit card ($0) is no longer available
You can downgrade the Chase British Airways card ($95) to the British Airways Rewards credit card ($0) – only available via product change