TPG reader question: What happens to my card's travel protection benefits when I downgrade?
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Over the past year, cardholders have had to make some difficult decisions about what to keep in their wallets.
While we've seen some incredibly generous sign-up bonuses and limited-time perks, the reality is that some people may not need a high-annual-fee card anymore. Before you cancel a card, remember to consider your options, including whether a downgrade may make the most sense.
TPG reader Daniel K. asks us this week what happens to baggage and travel protections on a card that he plans to downgrade.
[pullquote source="TPG reader Daniel K."]I have a Chase Sapphire Reserve card, and I was planning to downgrade. I was wondering how my lost baggage and travel protection works when this happens. Will the coverage still be under the original card's protection plan or fall under the new card's coverage?[/pullquote]
The premium Chase Sapphire Reserve is one of the best cards to use for travel, with perks such as 3x Ultimate Rewards points on travel purchases and an annual $300 travel credit. But beyond this, the $550-per-year Sapphire Reserve has one of the most comprehensive protection benefits of any card on the market. That includes trip cancellation and delay coverage and delayed and lost luggage reimbursement.
As a cardholder, you are bound to the benefits guide of your specific card product. With the Chase Sapphire Reserve -- and for most cards -- most of your protections and benefits will no longer apply after your account is closed.
That is, all of your protections and benefits will change to those offered by the new card, whichever one that may be.
Related: How to downgrade a Chase card
For instance, for the baggage delay benefit, the Chase Sapphire benefits guide states, "coverage will not be provided if the Cardholder's Account is closed before the Baggage Delay occurs." That means if you pay for a trip with your Sapphire Reserve and cancel the card before the trip, the benefit would likely not apply.
However, Chase goes on to note that "a Cardholder's cancellation of his or her Account [does not] invalidate or reduce any otherwise valid claim that has already been submitted." Therefore, if you already have an active claim but close your card, fear not, as your claim will still be valid.
Related: Which cards offer baggage delay protection?
For other benefits, such as travel protection and trip cancellation, there is less certainty on whether it would remain eligible after closing or downgrading your card account. It's best to refer to your card's individual benefits guide and call your card issuer for more details.
Related: Chase Sapphire Preferred Card vs. Chase Sapphire Reserve: Which card is right for you?
Bottom line
At the end of the day, the safest course of action is to assume that any protection and benefits will be null and void on your current card once you close your card account and switch or downgrade to a new card.
In Daniel's case, downgrading to a Chase Sapphire Preferred Card may be a wise option considering the healthy array of travel and return protection benefits offered on this sister card with a much more palatable $95 annual fee.
The one disadvantage of downgrading a card is that you typically won't get a sign-up bonus for the card you're downgrading to. However, downgrading allows you to maintain your credit line and the average age of credit, so it doesn't have the same negative effect on your credit score as canceling a card might. Finally, Daniel will retain full use of his transferable Ultimate Rewards points by holding onto an Ultimate Rewards-earning card that has an annual fee.