What Is a Credit Card Product Change and When Does It Make Sense?
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Let’s say you have a credit card, such as the Chase Freedom Unlimited, and you’re ready for an upgrade to something like the Chase Sapphire Preferred Card. A credit card product change allows you maintain your existing account while enjoying the benefits and terms of a different card. In addition, requesting a product change doesn’t require applying for a new account or performing a credit check, also known as a “hard pull.” Finally, some card issuers will even offer a pro-rated refund of your annual fee when you downgrade to a card with a less expensive annual fee or none at all.
In the credit card industry, each type of credit card is referred to as a product. For example, though the Chase Freedom and Chase Freedom Unlimited have similar names, these are considered to be two entirely different products. You can change your product from one to the other and still retain the account number, balance and due date of your old product. In fact, you can continue to use your old card before and even after you’re issued a new card with the name of the new product.
For example, if you change your Chase Sapphire Preferred Card to a Chase Sapphire Reserve, you can continue to use your old Sapphire Preferred card to make charges to your account while enjoying the terms and benefits of the Sapphire Reserve. Within a few days you should receive a new Sapphire Reserve card with the same number as your old Sapphire Preferred, but both will continue to work.
When should you consider a product change?
1. Product upgrades — When a new credit card is introduced, most people will try to apply for a new account in order to earn the sign-up bonus. But if you’re unable to qualify for a new account due to having opened too many accounts, you might consider upgrading one of your existing products to the new one in order to take advantage of its benefits.
2. Product downgrades — One of the most common reasons for requesting a product change is to avoid an annual fee without having to close your account. When you downgrade one of your existing accounts from a card with an annual fee to a no-annual-fee credit card, you may still be able to receive some key benefits while avoiding the yearly payment.
3. Obtaining a product that’s no longer available to new applicants — Credit card issuers sometimes stop offering great cards to new applicants, but these products might still be available when you request a product change. For example, Chase Sapphire Preferred customers may be offered a standard (no-annual-fee) Sapphire, and Barclaycard Arrival Plus World Elite Mastercard holders (applications not currently available) may be able to change to the standard (no-annual-fee) Arrival World Mastercard, both of which are no longer offered to new applicants.
4. Extending your credit history — When you’ve had an account for just a short time, you might not want to cancel it, as it could shorten the average age of accounts on your credit history and have a minor impact on your credit score. Instead of just closing your account to avoid paying an annual fee, consider a product change. This way, your account will continue to be open in good standing without reducing the average age of all of your accounts.
5. Maintaining your credit line — When you close a credit card account, you will reduce the total amount of available credit, which will raise your debt-to-credit ratio. If you’re worried about impacting your credit, you can request a product change to a no-annual-fee card instead of closing the account. This is especially important for those with just a few credit cards.
6. Avoiding new applications — Another reason to perform a product change is to use a new card without having to submit a new application. Each new application results in a check on your credit, and can also run afoul of some issuers’ policies such as Chase’s 5/24 rule. If there’s a credit card that meets your needs better than the one you currently have, a product change can allow you to use it without the impact of applying for a new card or opening a new account.
7. Discontinuing an unused card — If there is a drawback to Chase’s Sapphire Reserve, it’s that it can makes your Sapphire Preferred obsolete. There’s simply no reason to use your Sapphire Preferred to earn 2x Ultimate Rewards points on travel and dining when the Sapphire Reserve offers 3x in the same categories. So if you’re a new Sapphire Reserve cardholder and you also have a Sapphire Preferred, consider requesting a product change to another Chase card of your choosing, such as the Freedom or Freedom Unlimited. Then, you can transfer the points you earned from your Freedom or Freedom Unlimited account to your Sapphire Reserve account. Once the points are in your Sapphire Reserve account, you can redeem them for 1.5 cents apiece toward travel reservations or move them to airline miles or hotel points with transfer partners.
Disadvantages of Product Changes
For all the benefits, there are a few downsides to making product changes to your existing accounts. The biggest one is that you will not receive a sign-up bonus when you make a product change (with the exception of some targeted offers). As long as you’re aware of this going in, you can weigh it against the advantages for your particular situation.
In addition, most card issuers require that your account be open for at least one year before allowing you to make a product change, so don’t try to do it too soon after opening a card.
A very small percentage of cardholders know about this technique for maximizing your credit card portfolio, but it’s not very hard to do. By considering the best ways to strategically switch products on your existing accounts, you can always hold the best combination of cards for your needs.
Additional reporting by Liz Hund.
Featured photo by Guido Mieth/Getty Images.