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TPG reader Finsen sent me a message on Facebook to ask about changing his credit card to a new product:
“I have a United Explorer card that I don’t use frequently. I no longer want to pay the annual fee on the account, but I’d like to preserve its credit history. Can I do a product change from the Explorer card to a Freedom card or something similar?”
Every so often it’s a good idea to take stock of your credit card portfolio. I weigh the value of each card and its benefits against the annual fee to decide which ones I can justify keeping, and which ones are no longer needed. If a card isn’t worth having around, I’ll usually cancel it outright. However, if the account has a long history or if I might sacrifice points by closing it, then I look for other options.
You can generally downgrade (or in some cases upgrade) one credit card to another in the same rewards program. For example, if you had the Amex EveryDay Preferred Card, you could downgrade to the Amex EveryDay Card while preserving your account history and keeping your Membership Rewards points active. Unfortunately, you typically can’t crossgrade from a card in one loyalty program to another card in a different program.
The United MileagePlus Explorer Card naturally earns United miles, while the Chase Freedom card earns Ultimate Rewards points. If Finsen wanted to make that change, he’d have to put in a separate application, which wouldn’t help keep his existing account open. However, he could downgrade the Explorer card to the no-fee MileagePlus card — it only earns one mile for every two dollars spent and has none of the other benefits, but it would maintain his credit history.
Whether you should downgrade your card or cancel it entirely depends on how vital that account is to your overall credit score. Keep in mind that your credit history is measured by the average age of all your accounts; if you have a half dozen other cards that have been open for 5-10 years, then the impact of closing one of them will be minimal. On the other hand, if that’s your oldest account out of only a handful, then I’d lean toward keeping it open.
Check out these posts for more info on closing credit card accounts and minimizing annual fees:
- 5 Steps to Take Before Canceling a Credit Card
- Strategies for Minimizing Credit Card Annual Fees
- Credit Card Application Restrictions for the Major Issuers
Even after the introduction of the Chase Sapphire Reserve, the Chase Sapphire Preferred is still a fantastic choice if you want to avoid the Reserve’s $450 annual fee, earn 2x on all travel & dining and earn a 50,000 point sign up bonus.
- Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $625 toward travel when you redeem through Chase Ultimate Rewards®
- Named Best Credit Card for Flexible Travel Redemption - Kiplinger's Personal Finance, July 2016
- 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
- Earn 5,000 bonus points after you add the first authorized user and make a purchase in the first 3 months from account opening
- No foreign transaction fees
- 1:1 point transfer to leading airline and hotel loyalty programs
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 50,000 points are worth $625 toward travel
- No blackout dates or travel restrictions - as long as there's a seat on the flight, you can book it through Chase Ultimate Rewards