Reader question: Can you downgrade and then upgrade the same card?

Aug 23, 2021

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Editor’s note: This article is part of an ongoing column where we answer your credit card questions. If you would like to ask us a question, tweet us at @thepointsguy, message us on Facebook or email us at info@thepointsguy.com


An annual fee is only worth it when you’re getting more value out of the card than it costs. If you have a credit card that you stop using, we always recommend downgrading it over canceling it outright so that you keep that account open for your credit score.

But what about when you only want to downgrade for a short period of time? TPG reader Enrique Camargo reached out asking what would happen if he were to downgrade his Chase Sapphire Preferred Card. If you’re like Enrique and you’re not traveling as much right now, you may consider downgrading your cards with annual fees, too — but you may not want that switch to be permanent.

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I’ve had my Chase Sapphire Preferred for three years now, but with the delta variant, we will not be traveling much this year. I’m considering downgrading my Sapphire Preferred to a [Chase] Freedom Unlimited. In the future when I feel comfortable traveling again, can I upgrade again to the Sapphire Preferred?

Enrique Camargo

 

Downgrading (and then upgrading) a Chase card

On the surface level, this is possible. There is no official Chase policy saying that someone couldn’t ask for more than one product change on the same credit card, and I know of multiple people who have done something similar with different Chase credit cards.

When a cardholder downgrades from the Chase Sapphire Preferred to the no-annual-fee options like the Chase Freedom Unlimited or the Chase Freedom Flex, they keep the points accrued. But as Enrique mentioned, he will lose out on the ability to transfer points or redeem them for 1.25 cents each in the travel portal. If they later requested another product change back to the Chase Sapphire Preferred, those points would once again be redeemable for a bonus through the portal or transferrable to partners.

But just because this strategy is possible, that doesn’t necessarily mean it’s the best course of action. For starters, there is no guarantee that you would be approved for the product change back to a Chase Sapphire Preferred. Chase has historically been lenient with allowing product changes, but it is possible that it could review your account and decide not to allow you to upgrade — especially if you just downgraded a few months prior.

Related: How to downgrade a Chase credit card

Keep the Chase Sapphire Preferred

(Photo by John Gribben for The Points Guy)

While Enrique may not be traveling much in 2021, that doesn’t mean the card loses its value entirely. Chase has recently revamped the Sapphire Preferred with a plethora of perks to help offset the moderate $95 annual fee.

For starters, Chase just added new category bonuses and improved earning rates at a clip of 5 points per dollar on travel booked through the Ultimate Rewards Travel portal, 3 points per dollar on dining (up from 2x), 3 points per dollar on select streaming services, 3 points per dollar on online groceries (excludes Target, Walmart and wholesale clubs). The 3 points per dollar on dining now matches the $550-per-year Chase Sapphire Reserve’s earning rate.

In addition, the Chase Sapphire Preferred now has a $50 annual hotel credit that you can use on hotel stays purchased through the Ultimate Rewards Travel portal and for the first time, cardholders will get 10% of their points back each year based on their card spending. So, if Enrique spends $10,000 a year on the card, he’ll get back 1,000 points after his account anniversary year. According to TPG’s valuations, Chase Ultimate Rewards are worth two cents apiece, meaning Enrique would get a return of $20 in value back each year.

Don’t forget the other non-travel perks that come with the Sapphire Preferred — its partnerships with Doordash and Peloton, for example. Cardholders get at least one year of complimentary DashPass membership with DoorDash, which gives cardholders free delivery on orders of $12 or more. Plus, cardholders will receive up to $60 back on an eligible Peloton Digital or All-Access membership through Dec. 31, 2021.

If Enrique can maximize these credits and earn a decent amount of points back with the 10% return annually, these perks should easily justify the annual fee — even if he’s not traveling right now.

Related: Credit card annual credits you can use from home

Re-applying for the Chase Sapphire Preferred instead

If Enrique decides to downgrade from a Chase Sapphire Preferred, I would suggest that he re-applies rather than upgrading when he is once again eligible for the sign-up bonus. According to his submission, it’s been three years since the cardholder first applied for the Chase Sapphire Preferred. Chase requires waiting 48 months between earning Sapphire bonuses, so this person only has a little over a year left until he can apply and be eligible for a bonus again.

If he goes this route, Enrique could earn an additional 100,000 points (after spending $4,000 on purchases in the first three months) and still have the no-annual-fee Chase Freedom Unlimited since it earns 1.5%/1.5x on non-bonus purchases.

Bottom line

While there are no official rules that say you can’t request a downgrade and then an upgrade on the same card, I would caution against multiple product changes in quick succession. Chase could theoretically flag that as suspicious behavior and close your accounts.

If Enrique is planning on waiting to upgrade again for at least another year, then it could make sense to downgrade to the Chase Freedom Flex or Chase Freedom Unlimited now and then re-apply for the Chase Sapphire Reserve or Chase Sapphire Preferred separately in 2022 once he is eligible for another Sapphire bonus.

But if he only plans on having the Chase Freedom Unlimited for a few months to save on part of the Chase Sapphire Preferred annual fee, I’d recommend keeping it. The card comes with several non-travel perks and a cardholder will be able to utilize the more flexible redemption options should a 2022 travel deal come available in the next couple of months.

Additional reporting by Stella Shon.

Featured image by John Gribben for The Points Guy.

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