Don’t cancel your Chase credit card – It’s smarter to downgrade it instead

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An annual fee coming due is an excellent time to assess whether or not your Chase rewards credit card is worth keeping. When deciding whether or not to keep a card, consider if the perks make it worth the expense and whether you have other cards that overlap benefits and spending categories.

In many (if not most) cases, the Chase rewards points you’ll earn with many of the top Chase cards will get you more value than what you’ll pay in an annual fee. But if that’s not the case for you, consider downgrading instead of canceling to get a major bang for your buck and save your credit score.

Here are the dos and don’ts when it comes to canceling a Chase credit card. (Image by bearsky23/Shutterstock)

Reasons to downgrade your credit card instead of canceling it

The biggest reason to downgrade your credit card instead of canceling is to keep your overall credit score intact. Canceling your card impacts length of credit history, which makes up 15% of your overall credit score. It will also negatively affect your credit utilization, which makes up 30% of your score. By downgrading instead of canceling, you’re avoiding messing with 45% of your credit score, and in some cases, it comes at no extra cost to you! 

Keep a lengthy credit history

The length of your credit history is determined by the average age of all your accounts combined. If you close an account, especially an older one, it will seem like your credit history is shorter than it really is. That, in turn, could negatively impact your overall credit score.

Downgrading a credit card avoids this problem, as the length of your credit history doesn’t change because you still have an open account. 

Maintain a high credit limit

When you close a credit card, you lose the available credit limit on that account, which increases your credit utilization. This means you’ll be using a higher amount of your available credit, which is a red flag to lenders. By downgrading your card instead, your credit limit will still be available to you and your overall credit score will be safe. 

No downside with annual fee cards

If you downgrade your card to one with no annual fees, your credit score will stay the same — and likely only improve — all without paying an annual fee. A downgrade of this type will allow you to keep earning and redeeming rewards, even if they’re not as extensive as earned with an annual fee card. In this case, something is better than nothing!

What cards can you downgrade to?

There’s no limit on the amount of Chase credit cards you can have at once, but Chase will not approve you for most of their cards if you’ve opened five or more cards from any bank (not counting certain business credit cards) within 24 months. This rule is known’s as Chase’s 5/24 rule. As long as you stick within these guidelines, your options for a new card will be plentiful, and you won’t even need to be pre-approved

Chase Freedom Unlimited®

The Chase Freedom Unlimited is a no annual fee card with an easy to earn welcome bonus. With this card, you’ll earn a $200 bonus after spending just $500 on purchases in the first three months. Chase Freedom Unlimited holders also get 5% cash back on groceries up to $12,000 in the first year and 5% back on travel, 3% on dining and 1.5% back on all other purchases, making it easy to earn tons of rewards.

Chase Freedom Flex℠

The Chase Freedom Flex is a great option if you’re considering a downgrade because of its awesome benefits and perks, all for no annual fee. This card rivals many annual fee cards, with 5% cash back on travel, groceries, and bonus categories, 3% back on dining and drugstores, and 1% back on everything else. The Freedom Flex is excellent for those looking to earn rewards on everyday spending, and added perks like Lyft benefits and Doordash passes are pretty nice too. 

Chase Freedom & Chase Sapphire 

The Chase Freedom and the Chase Sapphire cards are both great options but are currently not accepting new applications. However, Chase’s website doesn’t make it clear if these cards are open to existing Chase customers looking to downgrade or not. If one of these cards seems to fit your needs, speak to a Chase agent and ask how you can get it with your downgrade. 

The information for the Chase Freedom card has been collected independently by Million Mile Secrets. The card details on this page have not been reviewed or provided by the card issuer.

How to downgrade a Chase credit card

With all downgrades, you’ll keep the same account number (assuming the new card is in the same network as the old, i.e. Visa, Mastercard, etc.), balance and due date of your old card. You’ll also be able to use your old card under the new one’s terms and conditions before it comes, making the downgrading process quick, easy and painless. 

How to downgrade online/through the Chase app

If you visit Chase’s website or app, you’ll be able to request a downgrade through a secure message portal from your account. Simply visit this feature on the website, request a product change, and provide the necessary information needed to downgrade your card.

Call the bank to downgrade

If you’d rather talk to someone on the phone than cancel online, call the customer service number on the back of your existing card. This will allow you to speak with a Chase agent who can assist you in the downgrade process. This option is great if you’re not quite sure which card you want to downgrade to, as the agent can talk you through all of your options. Once you’ve settled on a card, provide the agent with your account information and an address to mail the new card and you’re all set. 

FAQs about downgrading credit cards 

What will happen to your Chase Ultimate Rewards when you cancel or downgrade?

If you cancel your Chase card, you will lose any Ultimate Rewards points you’ve earned. In comparison, with a downgrade, you’ll never lose your rewards entirely, but their flexibility and worth will depend on the cards you’re downgrading to and from.

For example, if you downgrade from a Chase Sapphire Preferred Card to a Chase Freedom Flex℠, you’ll keep your rewards but lose the ability to transfer them to Chase hotel and airline partners

Additionally, the value of your points will take on the value of the card you downgraded to. For example, if you earned points with a Chase Sapphire Reserve® card, which are normally valued at 1.5 cents each, and then downgraded to the Freedom Flex, where points are normally valued at 1 cent each, all of your points would then be valued at 1 cent a piece.  

Does downgrading a credit card hurt your credit?

No, it actually does quite the opposite! If you downgrade a card your credit history and credit utilization will stay intact, which means your credit score won’t be greatly impacted. Canceling your credit card is where the real problems arise with regard to your credit score 

Do you need good credit to downgrade a credit card?

If your credit isn’t great, downgrading your card will probably help it rather than hurt it. Downgrading to a card with no annual fee and lower spending maximums will help you make payments on time and in full, which will increase your overall credit score. There’s no minimum credit score you need to downgrade. 

Bottom line

Canceling your Chase credit card is almost always more trouble than what it’s worth. By canceling, you’ll negatively impact your credit score and lose all of the rewards you worked so hard to earn. If you can’t keep up with the annual fees, downgrading your credit card is the way to go, as you’ll save both your credit score and your rewards!

Alexandra Maloney is a contributor to Million Mile Secrets, she covers topics on points and miles, credit cards, airlines, hotels, and general travel.

Editorial Note: We're the Million Mile Secrets team. And we're proud of our content, opinions and analysis, and of our reader's comments. These haven’t been reviewed, approved or endorsed by any of the airlines, hotels, or credit card issuers which we often write about. And that’s just how we like it! :)

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