Downgrade your credit card to go annual fee-free

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With the current situation putting travel on hold for at least the rest of 2020, many readers are thinking of ways to trim their credit card portfolios. However, rather than cancelling an account, it often makes sense to downgrade / product change to a card with no annual fee. To be clear, I’m not suggesting that you should downgrade every card in this post, but rather listing some of the most popular travel cards that can be downgraded as well as their best downgrade paths. Some banks offer far more product change options than others (several readers commented over the past few days to note that they didn’t realize you could product change a Citi AA card to a Double Cash for instance). In this post, I’ll list some reasons to consider downgrading versus cancelling as well as sensible downgrade paths for some of the most popular travel cards that may be on the chopping block.

Downgrade or cancel?

Some readers likely aren’t aware of all of their downgrade/change options. In some cases, the downgrade options are very minimal, but in others they may be more abundant. Sometimes, the right answer is just to cancel, but many times you may be better off product changing.

There are several reasons why you might consider a downgrade / product change rather than canceling:

  1. To keep points alive. With Citi, even if you have your points pooled with another card that earns Thank You points, any points you’ve earned with a card you close will expire after 60 days. With Chase, one could make the mistake of forgetting to move points before cancelling (though at least with Chase if you move them first (before closing) they will not expire). Product changing can help keep points alive.
  2. To keep benefits. Some key card family benefits are extended to even fee-free downgraded versions of the card. For example, a popular feature of the United credit cards is expanded award availability. You can get that same expanded availability even with a United card that has no annual fee. There are other similar situations (some covered below).
  3. To keep a path to upgrade back. You may prefer to downgrade rather than cancel to maintain a path to upgrade back to the card you currently have. For example, if you have the Ritz-Carlton credit card and don’t want pay the $450 fee this year because of the current situation but you think you may want it again in the future, you may consider downgrading to a Marriott card with a $95 annual fee so that you may be able to upgrade to the Ritz card again in the future since the Ritz card is no longer available for new applicants and you may not be eligible for a new Marriott credit card soon because of Chase’s 5/24 rule or the confusing Marriott credit card rules.
  4. To get some other benefit / category bonus. In some cases, there may be a card with no annual fee that earns a specific category bonus that could be more beneficial than the card you currently have.

On the other hand, in some cases it might make more sense to cancel. Here are a few reasons you might rather cancel:

  1. You want to free up an available card slot. Amex generally only allows you to have 5 credit cards (charge cards, like the Gold/Platinum/etc are not subject to this limit). If you want a new credit card and you already have 5 open with Amex, you’ll likely have to close one.
  2. You don’t want/need any of the downgrade options. Know that having two of the same card isn’t a problem with most issuers and can be beneficial in some cases as noted under the various issuers below. Still, in some cases you won’t have use for a downgraded card and may therefore prefer to cancel.
  3. You want to increase the odds of automatic approval. There’s no hard-and-fast data here, but anecdotal experience of some suggests that perhaps your odds of automatic approval increase with some issuers if you close an account or reduce credit limits before applying for a new card. That said, closing a card or reducing limits offers no guarantee and you may alternatively be able to offer those solutions to a recon rep to get a new card opened…if you didn’t already do them in advance. I wouldn’t probably cancel for this reason.
  4. You just want to keep it simple. One less card in your stash is one less card to track.

Whether to downgrade or cancel will be a highly situational choice. See each issuer below for an overview of popular downgrade paths.

The Universal Truths of downgrading credit cards

Citi's new rules

A couple of key things to note about product changing that are constant or near-constant across banks:

  • You will not get a new cardmember bonus when you downgrade or product change. Amex is a notable exception here as they sometimes offer a targeted bonus for upgrading, but there is no bonus for downgrading. Chase has sometimes offered small incentives for upgrading older discontinued cards to their newer more expensive versions, but not for downgrading.
  • You can not change a business card to a personal one or vice versa. I am not aware of any bank that allows this.
  • Citi allows product changes from a co-branded card to bank points or vice versa, but most banks do not allow changes across different brands. That is to say that Amex won’t let you change a Hilton card to a Delta card and Chase won’t allow changing a United card to a Hyatt card or an Ultimate Rewards card. Citi is a notable exception.
  • You typically need to have had your account open for 12 months or more before product changing.

On to downgrade paths for particular cards.

Cards that are eligible for downgrade and their best downgrade options

American Express

Key rules:

  • You can’t change a credit card to a charge card or vice versa
  • Co-branded cards have to stay in the co-brand family of cards (i.e. a Hilton card can only be changed to another type of Hilton card, not to an Everyday Preferred)
  • You will not be eligible in the future for the welcome bonus on either the card you change from or the card you change to. Amex lifetime language (present on most new applications) dictates that the welcome bonus is not available to you if you have or have had the card before (regardless of whether or not you received a bonus).

American Express downgrade options include:

Everyday Preferred:
  • Downgrade the Everyday Preferred to the Everyday credit card. This card has no annual fee and preserves the ability to transfer to airline and hotel partners.
Hilton Aspire or Hilton Surpass

An added bonus of downgrading Amex cards rather than cancelling is that Amex sometimes offers targeted upgrade bonuses that often do not have lifetime language restricting you from earning the upgrade bonus. In the future, you may get a chance to upgrade back to the card you previously held and earn some bonus points for doing it.

But what about the Gold or Platinum cards?

The Amex Gold ($250 annual fee) and Amex Platinum card ($550 annual fee) are expensive cards to hold, though their high annual fees can be offset by certain card benefits. The incidental credits aren’t what keeps them off of the downgrade list though. Unfortunately, there just isn’t a good downgrade option from those cards to my knowledge. You could downgrade to the Amex Green card, but it still carries a $150 annual fee. That’s probably not enough cheaper than the Amex Gold card to consider dropping its 4x bonus categories.

Update: Greg pointed out to me that one may want to downgrade the Platinum card because Amex has been known to pro-rate the annual fee when downgrading even during the middle of a cardmember year (though you may have to ask them to do this). That might make it worth doing if you’re looking to save money now and to be able to upgrade back to the Platinum in the future without sacrificing a 5/24 slot.

While Amex did enhance the Green card last year, I think anyone whose main objective is to dump a high annual fee would be better off using an Amex Everyday card or Blue Business Plus card as a no-annual-fee option for keeping Membership Rewards points alive. Since those are both credit cards, you can not downgrade a Gold or Platinum card to them.

Bank of America

Almost any BOA card

Note that I am not familiar with BOA product change availability on business credit cards. If anyone has recently downgraded a business card, let us know in the comments what options were available to you.

Barclays

Barclays has apparently offered downgrade bonuses in the past, though I haven’t heard of anything like that in years. I believe that Barclays requires you to stay in the same card family for downgrades, so these would be your options:

Aviator Red
  • Downgrade to the AAdvantage Aviator Mastercard. This card isn’t available for new applications, but one can downgrade the Aviator Red to this card to avoid the annual fee. The card earns 1 mile per $2 spent, so you wouldn’t want to spend on it.
JetBlue Plus Mastercard
  • Downgrade to the JetBlue Card, which has no annual fee. The card gets a 50% savings on in-flight purchases and earns 2x grocery and restaurants, so it isn’t a total lemon if you like flying JetBlue and want to save on the fee.
Wyndham Rewards Visa (with the $75 annual fee)
  • Downgrade to the Wyndham Rewards Visa that has no annual fee. I’d caution against this though if you have the old version of the $75 fee card which comes with 15K points at anniversary and earns 2x everywhere since you won’t get those benefits back if you upgrade again in the future. If you have the newer version of the card that only gets 6K points at anniversary and only earns 2x on gas, utility, and grocery, you could downgrade to save on the fee.

Chase

Key rules:

  • Can’t change between a co-branded card (like Hyatt, Marriott, United) and another co-brand or Ultimate Rewards. You have to keep changes within the same family of cards.
  • While you can not open a new card if you currently have that same card, you can downgrade to have a second instance of the same card. As an example, imagine that Sally has a Freedom card and a Sapphire Reserve card. She can not apply for a new Freedom card since she currently has one. However, she can downgrade her Sapphire Reserve to a second Freedom card.
Chase Sapphire Reserve or Chase Sapphire Preferred
  • Three downgrade options that each have no annual fee: to the Chase Freedom, Freedom Unlimited, or the plain Chase Sapphire card. Whether you prefer the Freedom card’s rotating categories or Freedom Unlimited’s 1.5x everywhere will depend on your other cards.

Chase Ink Business Preferred (or the no-longer-available Ink Plus)

  • Downgrade to a Chase Ink Business Cash or Chase Ink Business Unlimited. Whether you prefer the 5x bonus categories of the Ink Cash or the 1.5x-everywhere structure of the Ink Business Unlimited likely depends on whether you have a Freedom Unlimited. If you do have a Freedom Unlimited, it probably makes more sense to downgrade to an Ink Cash.
IHG Rewards Premier card
  • Downgrade to the IHG Rewards Club Traveler card. This card has no annual fee and retains the ability to get the 4th night free on award stays. It has no annual free night certificate.
Mileage Plus Explorer or United Club card
  • Downgrade a United credit card to the United Mileage Plus card, which has no annual fee. This United credit card is no longer available to new applicants, but it is possible to downgrade to it. It only earns 1 mile for every $2 spent, so you won’t want to use it to make purchases, but it still offers the same expanded award availability that its annual-fee-carrying cousins offer.

Citi

Citi is a notable exception in terms of product change rules in that you can generally product change to any other Citi card, even some that are no longer available, as long as your account has been open for at least 12 months. You do not need to stay in the same card family. That is to say that you could downgrade a Citi American Airlines Platinum Select credit card to a Double Cash or possibly even a Costco Anywhere Visa card. Note that you’d need a Costco membership for this.

Your best downgrade options are:

Citi American Airlines credit cards
  • Citi Double Cash. This card has no annual fee and earns 2% cash back which can be converted to 2x ThankYou points if you also have a Thank You points-earning card. You’re not giving up much by product changing to the Double Cash since the card usually offers no welcome bonus. Your best bet would be product changing to this from an American Airlines credit card. Keep in mind if you downgrade from a ThankYou card like the Prestige or Premier, the ThankYou points earned on the downgraded card will expire since the Double Cash does not earn ThankYou points but rather cash back that is convertible to ThankYou points.
  • Citi Costco Anywhere Visa. Note that I do not believe it is possible to change the Citibusiness AA card to the business version of this card, but data points indicate that the personal AA cards can be product changed to the Costco Anywhere Visa, which has no annual fee and offers 4% back on gas on up to $7K spend per year and 3% back on travel and dining. Note that you need to be a Costco member to get this card.
  • American Airlines AAdvantage MileUp Card. If you want to keep earning American Airlines miles, the MileUp card offers 2x at grocery stores and has no annual fee and not enough welcome bonus to ever consider applying for it new.

Note that you can additionally product change to the ThankYou cards noted in the next section since Citi more or less allows a product change to anything in most cases.

Citi Premier or Citi Prestige

Note: Do not downgrade a Premier or Prestige to a Double Cash. Doing so will cause the ThankYou points earned from that card to expire. See: Cancelling your Prestige or Premier Card? Here’s how to keep your ThankYou points alive.

US Bank

Radisson Rewards Premier Visa Signature
  • Radisson Rewards Visa. Note that there are several different Radisson credit cards. If you have the Premier Visa Signature and don’t want to pay the $75 annual fee, you could downgrade to the Radisson Rewards Visa which has no annual fee. With the no-fee card, you’ll only earn 1x on most purchases but can still earn annual free night certificates with $10K spend (up to $30K per year). I wouldn’t do that at 1x, but it’s possible.

Bottom line

While the options above likely represent your best options if you want to downgrade and get rid of an annual fee, but you may also have upgrade and downgrade options that carry an annual fee but offer a valuable benefit to you. Also keep in mind that not every bank rep will be as well versed in your options as you are. In some cases, you may simply need to HUCA (Hang Up, Call Again) and speak to a different rep to get it done (for example, we had a report or two from a reader who reached as Chase rep and didn’t know about the no-fee Mileage Plus credit card, but hanging up and calling again led to an agent who did). Finally, be aware that phone resources for most of the banks are pretty limited right now and are resulting in really long hold times or even a recording simply saying to call back later in some cases. If your product change isn’t imminently necessary to avoid an annual fee, you may consider waiting until it is. You may also try calling very late or early to try to “beat the rush”, but the hours when reps are available to make these changes may vary.

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