How to Downgrade Your Travel Credit Card When You Can’t Travel
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The COVID-19 pandemic has made it increasingly difficult for consumers to use valuable travel benefits offered by their favorite rewards credit cards. And with many of the top travel cards charging sizable annual fees, some people are left wondering if they should just cancel their travel rewards cards altogether.
Not only that, many consumers may simply find that paying an annual fee on a credit card is not really worth it in the long term. Even outside of issues caused by the pandemic, there are times when you just can’t use cardholder benefits as much as you planned, or when personal circumstances make it difficult to justify paying an annual fee when plenty of credit cards don’t charge one.
In most cases, you can downgrade a travel credit card with an annual fee to a no-fee card within the same rewards program. This strategy typically lets you maintain your rewards balance while also avoiding the downsides that come with closing a credit card account altogether.
Should you downgrade?
Downgrading your travel credit card can benefit you in more than one way. Some situations where downgrading makes sense include:
- Saving money. If you’re paying a high annual fee for a travel credit card that is heavy on travel benefits, but you don’t anticipate traveling much in the future, downgrading your card to a no-fee card will save you money.
- Avoiding a new hard inquiry. If you are interested in a no-fee travel credit card to replace the one you have, but you don’t want to apply for it directly or have a new hard inquiry on your credit report. This can make sense if you’re trying to keep your credit score high, or if you’re trying to keep inquiries down due to the Chase 5/24 rule (where you won’t be approved for a new Chase card if you’ve opened more than five consumer credit cards from any issuer within the past 24 months).
- Maintaining your line of credit. If you don’t believe you could qualify for another credit card right now due to too many recent credit card applications (or any other reason), you can preserve your line of credit if you downgrade a credit card you already have instead.
Why wouldn’t you just cancel your credit card? There are myriad reasons downgrading a credit card is superior to canceling, and not all of them have to do with preserving any rewards you’ve accumulated. Some of the benefits of downgrading instead of canceling include:
- Avoiding a spike in your credit utilization rate. Canceling a credit card will result in that line of credit disappearing altogether, which could result in a higher credit utilization if you carry revolving debt on other credit cards. Since the amounts you owe in relation to your credit limits make up 30% of your FICO Score, this could cause your score to go down. Most experts suggest keeping your credit utilization below 30% across all your accounts, so the risk of damage to your score is particularly high if you carry sizable balances on other revolving lines of credit.
- Avoiding reducing the age of your credit history. The length of your credit history makes up another 15% of your FICO Score. When you close a credit card account, and especially one you’ve had a long time, you have the potential to shorten your credit history and cause damage to your score.
- Maintaining your rewards balance. If you close a rewards credit card without redeeming your points, you typically give them up, unless they are banked within another loyalty brand, such as a hotel or airline. However, downgrading a credit card typically allows you to keep the rewards haul you’ve worked so hard to earn.
- Keeping your credit line for emergencies. Many people think of their credit cards and available credit lines as a last resort for emergencies. When you close your line of credit, you are shutting off this source of credit completely.
Note: Before you take the steps to downgrade to a credit card, keep in mind that doing so will bar you from earning the sign-up bonus on your new card. If you downgrade the Chase Sapphire Reserve® to the Chase Freedom Unlimited®, for example, you wouldn’t earn the bonus on your new card. That may not matter to you if you have other reasons for downgrading and aren’t worried about earning a bonus, but this is still worth keeping in mind.
Best credit cards to downgrade to
The right card for you to downgrade to will depend on the travel credit card you have right now. Here are some obvious card combinations for downgrading, as well as the benefits you can get in the end.
|Best credit cards to downgrade to|
|Travel rewards card||No-fee option||Benefits||Downsides|
|Chase Sapphire Reserve®||Chase Freedom Unlimited®||Avoid annual fee while maintaining rewards balance||Lose out on travel perks like airport lounge access and an annual travel credit and redemption options like 1:1 transfers to airlines and hotels|
|The Platinum Card® from American Express||The Amex EveryDay® Credit Card from American Express||Avoid annual fee while maintaining rewards balance||Lose out on valuable travel benefits like airline fee credits, credits for Uber, airport lounge access and more|
|Capital One Venture Rewards Credit Card||Capital One VentureOne Rewards Credit Card||Avoid annual fee and continue earning rewards||Lose out on travel redemption options and benefits|
|Citi Prestige® Credit Card||Citi® Double Cash Card – 18 month BT offer||Avoid annual fee and continue earning rewards||Lose travel perks airport lounge access and an annual travel credit as well as travel redemption options|
Issuer rules for downgrading
Different card issuers have their own rules when it comes to downgrading their rewards credit cards, although they’re not always hard and fast. In some cases, you may need to call your card issuer to find out exactly which card you may be able to downgrade to based on the type of card you have right now.
General card issuer rules surrounding downgrading include the following:
Chase typically allows cardholders to downgrade within the same family of cards. For example, you could downgrade the Chase Sapphire Reserve® to the Chase Freedom Unlimited® since both let you earn points in the Chase Ultimate Rewards® program.
Conversely, you could downgrade a co-branded Marriott credit card to a no-fee travel credit card from Marriott, or a co-branded United MileagePlus credit card to a United card with no annual fee. You must also have had your credit card for at least 12 months, and you cannot downgrade a personal card to a business card or vice versa.
American Express also allows downgrades within the same family of rewards, which makes sense since they offer American Express Membership Rewards® cards, co-branded credit cards with airlines and hotel brands and cash-back credit cards. You can downgrade a Delta credit card to another co-branded Delta card with no annual fee, but you cannot downgrade The Platinum Card® from American Express to a Delta credit card, or vice versa.
Also be aware that you’ll need to have your credit card account open for at least 12 months before you downgrade. If you don’t, American Express may claw back the rewards points you earned. Further, you can only downgrade a credit card to another credit card and a charge card to a charge card.
Citi typically lets cardholders downgrade their credit cards to any no-fee option, even if it’s not in the same family of cards. This means you could downgrade any Citi card to an option like the Citi® Diamond Preferred® Card or the Citi® Double Cash Card . Just like with other major card issuers, you need to have your credit card for at least 12 months before you try to downgrade.
Choosing the right credit card to downgrade to
Some credit cards offer very obvious downgrade options, like if you wanted to downgrade the Chase Sapphire Reserve® or the Chase Sapphire Preferred® Card.
With either card, downgrading to a no-fee option like the Chase Freedom Unlimited® or Chase Freedom Flex℠ would make sense since you could maintain your rewards balance and line of credit without having to pay an annual fee.
However, you should note that giving up one of these travel credit cards means forgoing your ability to transfer rewards to Chase Ultimate Rewards® transfer partners like Southwest Rapid Rewards® and Marriott Bonvoy™. You’ll also get less value for your points when you book travel through the Chase portal since the Chase Sapphire Reserve® gives you 50% more travel when you book with points and the Chase Sapphire Preferred® Card offers a 25% boost in value.
Other top travel credit cards don’t come with a downgrade option that is quite as obvious, which is why you should do some research to figure out which cards are available and how they might help you reach your goals.
If you truly believe you cannot travel for a few years due to the coronavirus crisis or any other reason, you may want to give up on travel points altogether and switch to a cashback credit card instead. That way, you could cash in your rewards for statement credits, a check, gift cards and other non-travel options until you’re ready to travel again.
Also keep in mind that you may not find a card to downgrade to, or the card you really want may not be from the same card issuer you have now. In that case, it can make sense to cancel your credit card and apply for the card you really want. Doing so will result in a hard inquiry on your credit report, but opening a new card can make it possible to earn a generous sign-up bonus and score a card with the combination of earnings and cardholder benefits you really want.
Steps to take before you downgrade your credit card
Research card options. Do some digging into the top rewards credit cards to see if there are any cards you may want to downgrade to from the same issuer. Also explore card options from other issuers until you find the right fit.
Redeem your rewards. If you have rewards tied to your account that you want to put to use before you cancel or downgrade your card, cash them in for statement credits or gift cards you could use later on.
Transfer your points to airline and hotel partners. If you have flexible travel points that can be transferred to partners (like Chase Ultimate Rewards® or American Express Membership Rewards®, for example), consider moving those points to airline and hotel partners so you can utilize them for travel when you’re ready.
Use valuable cardholder benefits. If your current card has perks you can use up before you downgrade, take steps to do so. As an example, this could mean using travel credits, applying for Global Entry or TSA Precheck for the fee credit or using dining credits tied to your card.
Make sure you understand if your rewards will change. Also make sure you understand how your rewards might change after you downgrade. If you’re downgrading from a travel credit card that lets you transfer points to airline and hotel partners to a cashback credit card, for example, you may maintain your rewards balance but lose some valuable redemption options during the transition.
Ask for a retention offer. You may want to prepare yourself for some card issuer pushback when you call in to downgrade your credit card.
For example, the customer service representative may try to remind you of all the card benefits and encourage you to keep the card.
With that in mind, one final strategy to try involves asking for a retention offer – or an offer of additional points or cash back meant to entice customers into keeping their cards.
In some cases, the customer service rep may offer you points or miles that exceed the value of the annual fee. Or, if you’re lucky, you may even get the annual fee waived for a year. But if you’ve decided that the card no longer serves you, then stick to your guns in asking for a downgrade.
Currently, the pandemic has made travel difficult to manage for the time being, which means that high annual fees on travel credit cards have become untenable for some. Or, if you don’t see traveling in your future for other reasons or want to save on annual fees, downgrading your credit card can help you maintain your line of credit and potentially even keep your rewards.
But it shouldn’t take a pandemic to determine whether your credit card annual fees are worth paying each year as you should always take a close look at any annual-fee credit cards you have to see if they still have value.