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Will I Pay the Full Annual Fee When Product Changing a Credit Card?

May 07, 2019
5 min read
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Will I Pay the Full Annual Fee When Product Changing a Credit Card?
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"Reader Questions" are answered twice a week by TPG Senior Points & Miles Contributor Ethan Steinberg.

When you're opening a new travel rewards credit card, timing isn't usually the most important factor (once you've made sure you're getting the highest bonus offer available). However, when it comes time to close, downgrade or product change a credit card, you'll want to time this action to get yourself the most benefits while minimizing the fees you need to pay. TPG reader Roy wants to know if he'll have to pay a full-year annual fee when accepting an upgrade offer ...

[pullquote source="TPG READER ROY"]I upgraded from the no fee Hilton Honors Amex to the Ascend card a few months ago and paid the annual fee. Now, I have an offer to upgrade to the Aspire card. If I take the upgrade, do I get credit for the annual fee I paid on the Ascend or do I have to pay the full $450?[/pullquote]

This scenario is actually perfect, as it lets us dive into a few complexities of American Express' annual fee policy. For starters, Amex allows you to get a full refund of your annual fee if you cancel your card within 30 days of the fee posting. If you downgrade your card after that, you can get a prorated annual free refund based on the amount of time left in the year.

Upgrades work in a similar fashion, though the math is slightly more complicated. Doctor of Credit reported, based on his own personal experience, that Amex will offer a prorated refund of the lower annual fee, and also only charge you a prorated portion of the higher annual fee on the card to which you're upgrading.

Let's apply that to Roy's question and assume for the sake of simplicity that he's product changing exactly halfway through his account year. In this case, Amex would issue him a 50% refund of the $95 annual fee on the Hilton Honors American Express Ascend Card (see Rates & Fees) and charge him 50% of the $450 annual fee on the Hilton Honors Aspire Card from American Express (see Rates & Fees). That would result in a net annual fee of $177.50, and the full $450 would then be due once the six month initial upgrade period is over.

The information for the Hilton Aspire Amex card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

Upgrading to the Aspire over the Ascend can be a great choice, as it provides a number of valuable perks, including:

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With the prorated cost of upgrading, the statement credits alone can make this card wildly profitable in the first year.

These policies vary heavily between issuers, so let's also discuss how Chase handles this situation. While Chase's policy on upgrades is a little less clear, reports indicate that if you downgrade your card more than 40 days after your annual fee posts, you should receive a prorated refund. As an example, let's say you hold both the Chase Sapphire Reserve and Chase Sapphire Preferred Card (before Chase added restrictions preventing new applicants from having both). If you decide to keep the Preferred and downgrade the Reserve to a card with no annual like the Chase Freedom Unlimited, you should be eligible to receive a prorated refund of your $550 annual fee.

In addition to the stated policies, you might be able to call the issuer in question and negotiate a specific discounted annual fee or prorated refund as part of your upgrade offer. While this is less likely to work for downgrades, clearly the bank is trying to incentivize you to upgrade your card. Like a retention offer, it might be flexible in making that happen.

Bottom Line

When it comes to premium credit cards like the Hilton Aspire, it's important to strategize to ensure you're getting as much value as possible in exchange for your annual fee. When possible, you should also look for ways to minimize the fees you're paying. The specific policies vary by issuer, but you can generally expect a prorated annual fee to be applied (or refunded) when you product change your credit card in the middle of your account year.

Thanks for the question, Roy, and if you’re a TPG reader who’d like us to answer a question of your own, tweet us at @thepointsguy, message us on Facebook or email us at

For rates and fees of the Hilton Ascend Card, click here.
For rates and fees of the Hilton Aspire Card, click here.

Featured image by Getty Images/Image Source
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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