When to Downgrade a Credit Card, and When to Cancel
Advertiser Disclosure: The Rewards Mom has partnered with CardRatings for our coverage of credit card products. The Rewards Mom and CardRatings may receive a commission from card issuers.
Upgrade, Downgrade, or Sign Up for a Welcome Bonus?
It’s always smart to look for ways to stretch the budget and make smart financial choices. Whether it’s saving on family vacations, earning rewards on groceries, or avoiding unnecessary fees, choosing the right credit card can make a big difference. But what happens when your current card isn’t working for you anymore? Should you upgrade, downgrade, or apply for a brand-new card with a generous welcome bonus? Let’s figure it out together!
What Is Downgrading a Credit Card?
Downgrading is when you switch to another credit card from the same issuer that earns the same type of rewards but comes with a lower (or no) annual fee. This can be a great option if you’re no longer getting enough value from your current card to justify the fee.
For example, if you have a United card but don’t fly United as much anymore (because you fly Southwest now!), the annual fee might not be worth it. You could downgrade your card to a no-annual-fee card, and your credit history stays intact since it’s considered the same account on your credit report.
What Is Product Changing a Credit Card?
Product changing is similar to downgrading, but instead of switching to a card in the same rewards family, you switch to a completely different type of rewards program within the same bank. This allows you to change to a card that better fits your current spending habits.
For example, if you have a card that earns travel rewards but you’re not traveling much anymore, you might switch to a card that earns cash back instead. Your account history remains the same, but you now earn rewards that better match your lifestyle.
Should You Downgrade, Product Change, or Cancel?
Each option has its pros and cons. Here are some key questions to ask before making a decision:
How long have you had the card? Keeping an older card can help maintain your credit history, which is good for your credit score.
Are there downgrade options available? Not all credit cards allow downgrades. Check your issuer’s policies first.
Will switching impact your ability to earn future bonuses? Some issuers, like American Express, may prevent you from earning a welcome bonus if you previously had the card—even if you never received a bonus before. Check these welcome bonus rules carefully before you make a final decision.
Do you need to free up space for a new card? Some banks, like Capital One and American Express, limit the number of cards you can have at one time.
Will you lose points or benefits? If your card earns transferable bank points, you may lose those rewards unless you have another card that supports them.
If this seems confusing at all, check out my Beginner’s Guide to Points & Miles . It will help you get started with all the different credit card terminology and give you a good starting point.
Why Signing Up for a New Card Might Be the Best Move
While downgrading or product changing can be smart, applying for a new credit card can give you access to valuable sign-up bonuses. Many credit cards offer lucrative welcome offers, which can be worth hundreds of dollars in travel rewards, cash back, or points. These welcome bonuses can make it so much easier to travel in an affordable way.
For example, one of our favorite Capital One cards has a great welcome bonus at the moment. Here’s a list of my favorite travel credit cards: Check them out here
When Downgrading Might Make More Sense
If you’re paying a high annual fee on a premium card but no longer using the benefits, downgrading could save you money while still allowing you to earn rewards.
The Drawbacks of Downgrading
While downgrading can be smart, it comes with some trade-offs:
No Welcome Bonus: Unlike applying for a new card, downgrading doesn’t come with a sign-up bonus.
No 0% APR Promotions: Many new credit cards offer 0% interest on purchases and balance transfers for the first year or more. If you downgrade, you lose out on that benefit.
Potential Loss of Benefits: Some premium cards offer perks like lounge access, free checked bags, or higher earning rates. Make sure you won’t miss out on benefits you actually use.
Bottom Line: Choose What’s Best for Your Family’s Finances
As a mom, you’re always balancing what’s best for your family—and that includes your finances. Whether you downgrade to save on annual fees, switch to a card that better fits your spending habits, or sign up for a new card to earn a big bonus, the key is making an informed decision.
If you want to maximize rewards while minimizing costs, consider:
Applying for a new card if a sign-up bonus and intro APR would benefit you.
Downgrading if you want to avoid an annual fee but keep your credit history.
Product changing if you want a different type of rewards while keeping your account open.
Whatever you choose, make sure your credit cards work for you—so you can focus on what really matters: making memories with your family! ❤️
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Advertiser Disclosure: The Rewards Mom has partnered with CardRatings for our coverage of credit card products. The Rewards Mom and CardRatings may receive a commission from card issuers.
Opinions, reviews, analyses & recommendations are the author's alone, and have not been reviewed, endorsed or approved by any of these entities.
