Your bank card’s annual payment is due. For one purpose or one other, you’ve got determined that it isn’t price paying the payment to maintain your card for an additional yr. Or perhaps it is a bank card you do not use, so that you’re contemplating closing the account.
Your first inclination could be to cancel your card. However, there are different choices: You may downgrade or product change your card as an alternative.
Wondering what these choices are and the way they work? Let’s take a look at what goes into the choice. Then you can also make an knowledgeable option to cancel, downgrade or product change your bank card.
Related: The playing cards TPG staffers are preserving, canceling and downgrading
What is downgrading a bank card?
Downgrading is while you change your bank card to a different card incomes the identical kind of rewards however with a decrease (or no) annual payment.
Here’s an instance: I beforehand held the United Explorer Card however wasn’t flying United a lot, so the $95 annual payment (waived for the primary yr) wasn’t price it to me. I downgraded this card to the United Gateway Card, which has no annual payment.
Related: When are you able to downgrade your bank card?
Both playing cards earn United Airlines miles, so that they’re in the identical household. I downgraded my card however did not have to open a brand new card. I additionally saved my credit score historical past with this card, because it’s thought-about the identical account on my credit score report.
It’s price noting that not all playing cards have downgrade choices. For instance, you may’t downgrade the IHG Rewards Premier Business Credit Card. That’s as a result of there is no different IHG enterprise bank card, and you’ll’t change between private and enterprise bank cards.
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Related: Don’t cancel: How to downgrade a Chase bank card
What is product altering a bank card?
Producing altering means swapping out your present card for one which earns a distinct kind of rewards. It’s totally different from downgrading, which suggests switching to a different card inside the similar household, i.e., incomes the identical kind of rewards.
Just as with downgrading, your account historical past is preserved since you are not canceling your bank card. You can even select a card with a decrease annual payment, if that is your purpose.
Related: What is a bank card product change, and when does it make sense?
Both Bank of America and Citi permit you to product change a bank card to a card that earns a very totally different kind of rewards.
For instance, I product modified the Air France KLM World Elite Mastercard® to the Bank of America® Unlimited Cash Rewards bank card. In one other occasion, I modified the Citi® / AAdvantage® Platinum Select® World Elite Mastercard® to the Costco Anywhere Visa® Card by Citi.
I used to be capable of protect my credit score historical past by preserving my accounts open but altering to a card that prices me nothing to maintain it open yr after yr.
The info for the Air France KLM Mastercard has been collected independently by The Points Guy. The card particulars on this web page haven’t been reviewed or supplied by the cardboard issuer.
Related: How your credit score scores work
Should I downgrade, product change or cancel a bank card?
You can cancel your bank card, closing your account completely. Policies fluctuate by financial institution, however you must obtain a refund of your annual payment (or a minimum of a part of it) in case you cancel your card inside 30 days of the annual payment posting.
Related: How to cancel a bank card
However, when deciding whether or not to cancel your card or preserve it open with a downgrade or product change, contemplate the next:
- How lengthy have you ever had this card? You ought to by no means shut or change a bank card earlier than you’ve got had it for a yr. Additionally, if that is one in every of your oldest bank cards, preserving your credit score historical past is helpful.
- What choices exist for downgrading or product altering? If you may’t change your present bank card to a different card, this reduces your choices. Know upfront what your choices are to make your retention cellphone name less complicated.
- If you alter to a different card, may that restrict your capacity to obtain a welcome bonus sooner or later? With American Express particularly, you might be blocked from receiving a welcome bonus in case you’ve had a card prior to now — even in case you solely had that card after a product change and did not obtain a welcome bonus on that card.
- Do you must shut a card with this financial institution? Banks like American Express and Capital One have limits on the variety of bank cards you may have with them at anyone time. If you are on the most, chances are you’ll want to shut a card earlier than you may open new playing cards and obtain welcome bonuses on these.
- If you shut this card, are you able to replicate its advantages with different playing cards? You should not shut or downgrade your solely bank card that gives airport lounge entry except you are keen to forgo this profit. Be certain your card’s advantages and in case you’ll lose something vital.
- What provides would you settle for to maintain this card for an additional yr? Think by prospects upfront so what retention provides you’d and would not settle for.
- Will you lose your factors or miles? If your card earns lodge or airline factors, any factors already transferred to your loyalty account are secure. If you are incomes factors from the financial institution’s program, you might lose factors if you do not have one other card that earns those self same factors.
Whatever you determine, it is vital to recollect that you’re nonetheless accountable for paying any balances in your card. Plus, you must examine in your closed accounts to make sure there aren’t any surprising expenses.
Related: Quick tip: Check your bank card accounts 30 days after closing them
Bottom line
Part of your bank card technique every year must be deciding which playing cards you are preserving, closing and altering to a distinct card. Numerous elements go into the choice round canceling, downgrading or product altering a bank card.
Related: Pros and cons of downgrading your bank cards proper now
After contemplating the elements above, you must have a very good understanding of those elements. Now, you can also make an knowledgeable choice about which playing cards will earn a spot in your pockets for an additional yr.
Editor’s observe: “Points of View” is a sequence evaluating selections on which bank card to make use of. If you’re dealing with a dilemma about which card is greatest for an upcoming cost, e mail us at tips@thepointsguy.com with the topic line: “Points of View query.”
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