Perspective: Should I cancel or downgrade my credit card? – The Points Guy

Your credit card’s annual fee must be paid. For one reason or another, you’ve decided it’s not worth paying the fee to keep your card for another year. Or maybe a credit card you don’t usenow you are thinking of closing the account.

Your first priority may be to cancel your card. However, there are other options: You can discount or change your product card.

Wondering what those options are and how they work? Let’s look at the final results. Then you can make an informed decision to cancel, downgrade or replace your credit card.

Target: TPG staff cards are stored, canceled and downgraded

What is a credit card downgrade?

Downgrading is when you switch your credit card to another card that offers the same type of credit but with a lower (or no) annual fee.

Here’s an example: I used to own the United Explorer Card but haven’t flown United much, so the $95 a year (first year waiver) wasn’t worth it to me. I put this card down in the United Gateway Cardwhich has no annual fee.

Target: When can you lower your credit card?


Both cards earn United Airlines miles, so they belong in the same family. I downgraded my card before I needed to open a new one. I also kept my account history on this card, since it is listed as the same account on my credit report.

It is important to note that not all cards have discount options. For example, you cannot reduce the IHG Rewards Premier Business Credit Card. This is because there is no other IHG business credit card, and you cannot switch between credit and business cards.

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Target: Don’t cancel: How to lower a Chase credit card

What is replacing a credit card?

Switching means exchanging your current card for one that earns a different type of reward. Other than downgrading, it means switching to another card within the same family, meaning, getting the same type of rewards.

Just like downgrading, your credit history is saved since you don’t cancel your credit card. You can also choose a card with a low annual fee, if that’s your goal.

Target: What is credit modification, and when is it appropriate?

Both Bank of America and Citi allow you to trade a credit card for a card that earns a different type of reward.

For example, I changed the product Air France KLM World Elite Mastercard® in the Bank of America® Unlimited Cash Rewards credit card. In another case, I changed the Citi® / AAdvantage® Platinum Select® World Elite Mastercard® in the Costco Anywhere Visa® Card by Citi.

I was able to save my account history by keeping my accounts open and switching to a card that has no charge to open it year after year.

The information for the Air France KLM Mastercard was collected independently by The Points Guy. The card information on this page has not been reviewed or provided by the card issuer..

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Should I downgrade, change products or cancel a credit card?

You can cancel your credit card, permanently close your account. Policies vary by bank, but should get a refund of your annual fee (or a small amount) if you cancel your card within 30 days of placing the annual fee.

Target: How to cancel a credit card

However, when deciding whether to cancel your card or continue to unlock or switch products, consider the following:

  • How long have you had this card? You should never close or switch a credit card before you’ve had it for a year. Also, if this is one of your old cards, saving your history is useful.
  • What options are there for downgrading or replacing products? If you can’t switch your credit card to another card, your options are limited. Know in advance what your options are for making yours hang up the phone simple.
  • If you switch to another card, could that limit your ability to get a welcome bonus in the future? With American Express in particular, you may be barred from receiving a welcome bonus if you’ve had a card in the past — even if it’s just your card after a product change and did not receive a welcome bonus with that card.
  • Do you need to close a card at this bank? Bank like American Express and First Capital limit the number of credit cards you can have with them at any one time. If you are high, you may need to close a card before you can open new cards and receive welcome bonuses on those.
  • If you close this card, can you replicate its benefits on other cards? You don’t have to close or lower your screen alone credit card to get access to the airport unless you are willing to give up this privilege. Make sure you know the benefits of your card and if you lose something important.
  • What offers would you accept to keep this card for another year? Think first about the possibilities you will find stop offer you accept and you don’t.
  • Will I lose my points or miles? If your card earns hotel or airline points, whatever Points already credited to your loyalty account are safe. If you are earning points from the bank’s program, points can be lost if no other card gives the same points.

Whatever you choose, it’s important to remember that you are responsible for paying off any balance on your card. Also, you should check your closed account to make sure there are no unexpected charges.

Target: Quick tip: Check your credit card information 30 days after closing


bottom line

Part of your annual financial planning should be deciding which cards you are keeping, closing and switching to another card. There are many factors that go into the decision about canceling, downgrading or switching products on a credit card.

Target: The pros and cons of downgrading your credit cards now

After you have reviewed the above, you should have a good understanding of these things. Now, you can make an informed decision about which cards will have room in your wallet for the next year.

Editor’s Note: “Points of View” is a series that examines the decisions about which credit card to use. If you’re having trouble deciding which card is best for an upcoming payment, email us with the subject line: “Questions of Vision.”

Also in this series:

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