Considering canceling your credit card? Here's why you might want to "downgrade" it instead
Editor's Note
Your credit card's annual fee is due. For one reason or another, you've decided that it's not worth paying the fee to keep your card for another year. Or maybe it's a credit card you don't use or want anymore, so you're considering closing the account.
Your first inclination might be to cancel your card. However, other options exist: You could downgrade or product change your card instead.
Wondering what those options are and how they work? Let's look at what goes into the decision. Then you can make an informed choice to cancel, downgrade or product change your credit card.
Related: The cards TPG staffers are keeping, canceling and downgrading
What is downgrading a credit card?
Downgrading is when you change your credit card to another card earning the same type of rewards but with a lower (or no) annual fee.
Here's an example: I previously held the United℠ Explorer Card (see rates and fees) but wasn't flying United much, so the $150 annual fee ($0 introductory annual fee for the first year) wasn't worth it to me. I downgraded this card to the United℠ Gateway Card (see rates and fees), which has no annual fee.
Related: When can you downgrade your credit card?
Both cards earn United Airlines miles, so they're in the same family. I downgraded my card but didn't need to open a new card. I also kept my credit history with this card, since it's considered the same account on my credit report.
It's worth noting that not all cards have downgrade options. For example, you can't downgrade the IHG One Rewards Premier Business Credit Card (see rates and fees). That's because there's no other IHG business credit card, and you can't change between personal and business credit cards.
Related: Don't cancel: How to downgrade a Chase credit card
What is product changing a credit card?
Producing changing means swapping out your current card for one that earns a different type of reward currency. It's different from downgrading, which means switching to another card within the same family, i.e., earning the same type of rewards.
Just as with downgrading, your account history is preserved since you aren't canceling your credit card. You can also choose a card with a lower annual fee if that's your goal.
Both Bank of America and Citi allow you to product change a credit card to a card that earns a completely different type of rewards.
For example, I product changed the Air France KLM World Elite Mastercard® to the Bank of America® Unlimited Cash Rewards credit card. In another instance, I changed the Citi® / AAdvantage® Platinum Select® World Elite Mastercard® to the Costco Anywhere Visa® Card by Citi (see rates and fees).
I was able to preserve my credit history by keeping my accounts open yet changing to a card that costs me nothing to keep it open year after year.
The information for the Air France KLM Mastercard and the Citi® / AAdvantage® Platinum Select® World Elite Mastercard® has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Related: How your credit scores work
Should I downgrade, product change or cancel a credit card?
You can cancel your credit card, closing your account permanently. Policies vary by bank, but you should receive a refund of your annual fee (or at least part of it) if you cancel your card within 30 days of the annual fee posting.
Related: How to cancel a credit card
However, when deciding whether to cancel your card or keep it open with a downgrade or product change, consider the following:
- How long have you had this card? We recommend against closing or changing a credit card before you've had it for a year. Additionally, if this is one of your oldest credit cards, preserving your credit history is beneficial.
- What options exist for downgrading or product changing? If you can't change your current credit card to another card, this reduces your options. Know in advance what your options are to make your retention phone call simpler.
- If you change to another card, could that limit your ability to receive a welcome bonus in the future? With American Express in particular, you could be blocked from receiving a welcome bonus if you've had a card in the past — even if you only had that card after a product change and didn't receive a welcome bonus on that card.
- Do you need to close a card with this bank? Banks like American Express and Capital One have limits on the number of credit cards you can have with them at any one time. If you're at the maximum, you may need to close a card before opening new cards and receiving welcome bonuses on those.
- If you close this card, can you replicate its benefits with other cards? You shouldn't close or downgrade your only credit card that provides airport lounge access unless you're willing to forgo this benefit. Be sure you know your card's benefits and if you'll lose anything important.
- What offers would you accept to keep this card for another year? Think through possibilities in advance so you know what retention offers you would and wouldn't accept.
- Will you lose your points or miles? If your card earns hotel or airline points, any points already transferred to your loyalty account are safe. If you're earning points from the bank's program, you could lose points if you don't have another card that earns those same points.
Whatever you decide, remember that you are still responsible for paying any balances on your card. You should also check your closed accounts to ensure there are no unexpected charges.
Related: Quick tip: Check your credit card accounts 30 days after closing them
Bottom line
Each year, part of your credit card strategy should be deciding which cards you're keeping, closing and changing to a different card. Numerous factors go into the decision around canceling, downgrading or product changing a credit card.
After considering the factors above, you should have a good understanding of these factors. Now, you can make an informed decision about which cards will earn a spot in your wallet for another year.
Related: Pros and cons of downgrading your credit cards right now
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| 2X | Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com. |
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Intro offer
Annual Fee
Recommended Credit
Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
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Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.
Rewards Rate
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 3X | Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com. |
| 2X | Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com. |
| 1X | Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases. |
Intro Offer
You may be eligible for as high as 100,000 Membership Rewards® Points after spending $6,000 in eligible purchases on your new Card in your first 6 months of Membership. Welcome offers vary and you may not be eligible for an offer.As High As 100,000 points. Find Out Your Offer.Annual Fee
$325Recommended Credit
Credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.Excellent to Good
Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.