At a Glance

If your current credit card isn’t aligning with your financial situation, it may be time to get rid of it. But before you cancel the card, consider the option of downgrading it instead to save your credit score. Not only will you keep a good relationship with your credit issuer, but you might find a card that gets you the perks you love at a fraction of the cost. Here’s everything you need to know about downgrading a credit card successfully, plus a few tips for finding the right new card.

In this article, you’ll learn:

What is credit card downgrading?

Credit card downgrading is switching to a different credit card offered by the same issuer, typically one with lower annual fees or fewer benefits. This allows you to maintain your relationship with the issuer while avoiding the need to cancel your current card. By downgrading, you can save money on annual fees and keep a credit card that aligns better with your financial situation.

How does a credit card downgrade work?

When you want to downgrade your credit card, the first step is to contact your credit card issuer and inquire about their downgrade options. They will provide you with a list of available cards you can switch to. Typically, the cards offered for downgrading have lower annual fees, fewer benefits, or lower credit limits.

Once you have chosen a card to switch to, the issuer will guide you through the process. They may ask you to submit an application for the new card or simply transfer your existing account to the new card. In some cases, you may be required to close your current card and open a new one.

It’s important to note that downgrading your credit card does not eliminate any outstanding balance or affect your payment obligations. You will still be responsible for paying off any existing balances on the downgraded card.

How to downgrade your credit card ?

When you’re ready to make the switch, you’ll need to pick the right card and let your credit card issuer know you’re prepared to make the change.

1. Choose a new card

  • Evaluate your needs: Consider what features are important to you in a credit card. Do you want a lower annual fee, a lower interest rate, or different rewards? Make a list of priorities to guide your search for a new card.
  • Research available options: Visit your credit card issuer’s website or contact their customer service to find out which cards are available for downgrading. Compare each card’s features, fees, and benefits to determine which one aligns best with your needs.
  • Consider the downgrade terms: Some credit card issuers may have specific requirements or restrictions for downgrading. Make sure you understand any potential limitations or conditions before making a decision.
  • Apply or request a switch: Follow the issuer’s instructions to apply for the new card or request a switch once you’ve chosen a card. Be prepared to provide any necessary information or documentation, such as proof of income or identification.
  • Compare: Best Credit Cards

2. Contact your credit card issuer

  • Contact customer service: Contact your credit card issuer’s customer service department to inform them of your intention to downgrade your card. They will guide you through the process and provide any necessary instructions.
  • Be clear about your reasons: Explain why you want to downgrade your card, such as financial constraints or changing spending habits. This can help the customer service representative understand your needs and offer alternatives or solutions.
  • Follow their instructions: Your credit card issuer may require you to complete an application or provide additional information. Follow their instructions carefully to ensure a smooth transition to the new card.
  • Confirm the downgrade: Once the downgrade is complete, double-check that your new card has been activated and your old card has been deactivated. Update any automatic payments or billing information associated with the old card to avoid disruptions.

Reasons why you might want to downgrade your credit card

There are several reasons why you might want to downgrade your credit card:

  1. High annual fees: If your current credit card has high annual fees that are no longer worth it, downgrading to a card with lower or no annual fees can help you save money.
  2. Changing spending habits: If your spending habits have changed and you no longer benefit from the rewards or perks offered by your current credit card, downgrading to a card with rewards or benefits that align better with your new spending patterns can be more beneficial.
  3. Financial constraints: If you are facing financial constraints and can no longer afford your current credit card’s annual fees, downgrading to a card with lower (or no) fees can help you better manage your finances.
  4. Simplifying your credit card portfolio: If you have multiple credit cards and want to streamline your finances, downgrading to a card that offers similar benefits but with lower fees can help you simplify your credit card portfolio.
  5. Avoiding a credit card cancellation: Canceling a credit card can hurt your credit score. By downgrading your credit card instead of canceling it, you can maintain your relationship with the credit issuer and preserve your credit history.

Pros and cons of downgrading your credit card

Pros

  1. Lower annual fees: Downgrading to a card with lower yearly fees can save you money in the long run. You can enjoy the benefits of a credit card without paying excessive fees.
  2. You’ll maintain a good credit history: Canceling a credit card can negatively impact your credit score. You can keep your credit history intact by downgrading and maintaining a positive relationship with your credit issuer.
  3. You might retain your current credit limit: When you downgrade, your credit limit may remain the same. This can help you maintain a healthy credit utilization ratio and potentially improve your credit score.
  4. Access to different perks: While downgraded cards may have fewer benefits, they still offer certain perks, such as rewards programs, cash back, or travel discounts. You can choose a card that aligns better with your current financial needs and still enjoy these advantages.

Cons of downgrading a credit card

  1. Reduced benefits: When you downgrade your credit card, you may lose some of the perks and benefits available on your previous card. This could include travel insurance, purchase protection, or access to airport lounges.
  2. Lower rewards earning potential: Downgraded cards may offer lower rewards rates or limited redemption options than your previous card. This could result in earning fewer rewards or not being able to maximize their value.
  3. Limited credit limit: When you downgrade your card, your credit limit may also be reduced. This can impact your ability to make larger purchases or manage higher expenses.
  4. Limited flexibility: Downgraded cards may have more restrictions or limitations compared to your previous card. This could include restrictions on where you can use the card, lower credit limits for cash advances, or higher fees for certain transactions.
  5. Potential for missed opportunities: By downgrading your card, you may miss out on future promotions, offers, or upgrades only available to cardholders with higher-tier cards.

Is it right to downgrade your card?

Downgrading your credit card can be a good option in certain situations, but it ultimately depends on your financial goals and circumstances. Ultimately, whether it’s right for your finances depends on whether you use the card and utilize its benefits enough to keep the card open. If it’s costing you more (annual fees, interest, etc.) than you’re getting back in rewards or perks, it’s probably best to move to a card that’s better suited to your needs.

FAQs

Each credit card issuer has its policies and guidelines for downgrading cards. Some issuers may allow you to downgrade your card at any time, while others may have specific timeframes or requirements. It’s best to contact your credit card issuer directly to inquire about their particular policies and procedures for downgrading cards.

Downgrading a card can be a better option than canceling it. Canceling a credit card can hurt your credit score, as it can lower your overall available credit and decrease the average age of your credit accounts. By downgrading your card instead of canceling it, you can maintain your relationship with the credit issuer and preserve your credit history. Additionally, downgrading can allow you to keep any rewards or benefits associated with the card, albeit potentially at a lower level.

To request a downgrade of your credit card, follow these steps:

  1. Contact your credit card issuer: Call the customer service number on the back of your credit card or visit the issuer’s website to find the appropriate contact information.
  2. Inquire about downgrade options: Ask the customer service representative about the available downgrade options for your credit card. They will provide you with information on the different card options and their associated benefits.
  3. Choose a new card: Select the card that best fits your current financial needs and preferences. Consider factors such as annual fees, rewards programs, interest rates, and other benefits important to you.
  4. Provide necessary information: The customer service representative will guide you through the process and may ask for additional information, such as your income, employment details, and current credit card information.
  5. Review and accept the terms: Carefully read through the terms and conditions of the new card before taking the downgrade. Ensure that you understand any changes to fees, rewards, or benefits.
  6. Confirm the downgrade: Once you have chosen the new card and reviewed the terms, confirm your decision to downgrade. The customer service representative will assist you in completing the process and may give you a confirmation number or reference.
  7. Receive your new card: Your new downgraded credit card should arrive in the mail within a few business days. Activate the card and update any automatic payments or recurring charges associated with your old card. You may also want to mail back or destroy the old card, just to be safe.

Downgrading a credit card can vary in terms of ease, depending on the credit card issuer. Some issuers may have a straightforward process for downgrading cards, while others may have more restrictions or requirements. Generally, the process involves contacting the credit card issuer, inquiring about downgrade options, choosing a new card, providing necessary information, reviewing and accepting the terms, confirming the downgrade, and receiving the new card. It is recommended to contact your credit card issuer directly to understand their specific policies and procedures for downgrading cards.

The length of time you should wait to downgrade a card can vary depending on the credit card issuer. Some issuers may allow you to downgrade your card at any time, while others may have specific timeframes or requirements. It’s best to contact your credit card issuer directly to inquire about their specific policies and guidelines for downgrading cards. They will be able to provide you with the most accurate information and guide you through the process.