When can you downgrade your credit card?
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If the annual fee just came due for one of your travel rewards cards, you may find it difficult to justify the expense if you're not getting enough value in return. If you find you aren't able to maximize the card's benefits, earning rates or redemption opportunities, there may be an option besides paying the annual fee, canceling your card or calling to see if you can snag a reconsideration offer. That option is to downgrade your card.
As a result of policies included in the Credit CARD Act of 2009, you'll generally need to wait until you've had your card for a year before you can downgrade it. But some issuers have different policies, and there are also some other aspects to consider. Today I'll cover when you can downgrade your credit card account for most major card issuers — and when it might be a good option.
What does it mean to downgrade a card?
Downgrading your card means switching to another credit card offered by the same issuer with a lower fee (or none at all) and (most likely) fewer benefits. Since you aren't opening a new account, there shouldn't be a new inquiry on your credit report, and your online login information should stay the same. You'll receive a new credit card number and a new physical card in the mail, but your account history, credit limit and other factors that affect your credit score shouldn't change.
You can save on annual fees by downgrading your premium cards. However, some issuers base your eligibility for sign-up bonuses on which credit cards you've had open, not just which cards you've earned a bonus on. So be wary that downgrading a card might prevent you from earning a valuable bonus in the future.
Most issuers only allow you to upgrade or downgrade within a single family of cards. But, issuers may not offer all cardholders the same downgrade options — and some of your cards may not have any downgrade options at all. Finally, note that while issuers may offer bonus points when you upgrade to a new credit card product, it's unusual for an issuer to provide an incentive like bonus points for you to downgrade.
Related: The ultimate guide to credit card application restrictions
When can you downgrade an American Express card?
Amex doesn't officially require you to hold a card for a year before downgrading it. However, you should wait at least one full year because Amex has language in the terms and conditions of its card applications that explicitly call out cardholders who downgrade their account within the first year. Here's the language in the current American Express® Gold Card welcome offer:
If we in our sole discretion determine that you have engaged in abuse, misuse, or gaming in connection with the welcome offer in any way or that you intend to do so (for example, if you applied for one or more cards to obtain a welcome offer (s) that we did not intend for you; if you cancel or downgrade your account within 12 months after acquiring it; or if you cancel or return purchases you made to meet the Threshold Amount), we may not credit Membership Rewards® points to, we may freeze Membership Rewards® points credited to, or we may take away Membership Rewards® points from your account. We may also cancel this Card account and other Card accounts you may have with us.
Amex also doesn't allow you to change products between personal and business cards and you have to stay within a single card family (such as Delta, Marriott or Membership Rewards). To determine your options and ask for a downgrade, call the number on the back of your card or log in to your online account and chat with an Amex representative.
Because of Amex's "once per lifetime" offer rule, I generally wouldn't recommend downgrading to any card that has a welcome offer. After all, by downgrading, you'll lose the opportunity to earn a welcome offer on that card in the future. But if you're thinking of canceling a card, it's worth checking your downgrade options first.
Related: Choosing the best American Express credit card for you
When can you downgrade a Chase card?
Chase may allow you to downgrade your card to another card within the same family if the account you want to downgrade has been open for at least one year. To determine your options or ask for a downgrade, call the number on the back of your credit card.
Due to Chase's 5/24 rule, many cardholders prefer to downgrade Chase cards instead of canceling them. But there are other reasons to downgrade a Chase card. For example, you might want to downgrade the Chase Sapphire Reserve to a no-annual-fee option after you've held it for 48 months so that you can then earn a sign-up bonus for the Chase Sapphire Preferred Card. Or, you might want to downgrade the Marriott Bonvoy Boundless Credit Card to the Marriott Bonvoy Bold Credit Card to avoid paying the annual fee.
Related: Downgrading and product changing: What to do if you want that Sapphire Preferred sign-up bonus
When can you downgrade a Citi card?
Citi generally requires that you wait at least 12 months from opening the account before you can downgrade your card. But, unlike most other issuers, Citi may allow you to downgrade to cards outside the original card's family. Be sure to call the number on the back of your card and ask for your options.
Related: The best Citi credit cards
When can you downgrade a Capital One card?
Capital One doesn't seem to have a hard-and-fast rule about how long your account has to be open before you can downgrade a card. But I'd generally recommend waiting until you've held the card for at least a year. Call the number on the back of the card if you're interested in downgrading.
Since many of the no-annual-fee Capital One cards offer modest sign-up bonuses that, according to the company, "may not be available for existing or previous account holders," downgrading to one of these cards may mean you're ineligible for a sign-up bonus on that card if you apply at a later time.
Related: Can you downgrade and then upgrade the same card?
When can you downgrade cards with other issuers?
Other issuers may allow you to downgrade your card, although many smaller issuers don't allow product changes. For a more definitive guide on product change, you can check out this TPG article. A good rule of thumb is to wait until your annual fee comes due and then call the number on the back of your card to inquire about downgrade options.
Related: Pros and cons of downgrading your credit cards right now
Bottom line
If you're not getting your money's worth from your travel rewards card, downgrading to a no-annual-fee card can be an excellent way to keep your card's credit line open while avoiding the annual fee. When in doubt, be sure to call the customer service line found on the back of your card to learn about your options. You may find that your issuer provides you with a retention offer that may be worth considering to justify keeping your card after all.
Additional reporting by Stella Shon and Christina Ly.