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Every now and again in the miles & points hobby, it’s critical to sit down and reevaluate your wallet. That’s because you’re consistently opening credit cards that charge annual fees of $95+ per year!
I’ve got ~18 credit cards, the majority of which have (at one point) come with annual fees. If I decide a card no longer serves my travel situation, I need to ditch the annual fee!
I presently own 2 annual fee cards that I never use anymore (and I actually meant to cancel them last year… 🙁 ) – the Barclaycard Arrival Plus® World Elite Mastercard® and the AAdvantage® Aviator® Red World Elite Mastercard. But I’m not going to cancel them for 2 reasons:
- I don’t want to lose the credit history I have with these cards
- I don’t want my available credit to decrease
There’s a very simple way to maintain these items without paying the annual fee. Downgrade credit cards!
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Downgrade Credit Cards Instead of Canceling
When you cancel a credit card, you’ll lose the credit history you’ve accrued with that card. And if you don’t move your credit line over to another card, you’ll lose your available credit, too! Both of those things are factors that determine your credit score.
However, if you’re totally done with one of your annual fee cards, you should NOT continue to pay the annual fee just so your credit score won’t take a minor hit. You can often downgrade your card to a no-annual-fee version. When you do this, all your card info transfers over to the new card:
- Credit card number (in most cases)
- Credit line
- Credit history
Both my Barclaycard Arrival Plus and AAdvantage Aviator Red have some valuable features that make them worth keeping. But not enough to justify the annual fees (for me).
For example, the handiest feature of the Barclaycard Arrival Plus (besides the enormous welcome bonus) is that it’s Chip + PIN enabled. I firmly believe that any globetrotter should have this card.
Chip + PIN comes in very handy when you’re wandering through Europe and you need to use an unmanned kiosk or payment machine (like you’ll find at many gas stations). Almost any other credit card won’t work with them.
I’m downgrading this card to the no annual fee version (the Barclaycard Arrival), because it’s also Chip + PIN enabled. I can have my favorite feature without paying an $89 annual fee!
The Hazards of Downgrading a Card
Not All Cards Can Be Downgraded
When you downgrade a card, you must make sure there is a no-annual-fee equivalent. In other words, there must be a card in the same “family” that comes with no annual fee. For example:
- You can downgrade a card like the Chase Sapphire Preferred Card ($95 annual fee) to the Chase Freedom (NO annual fee) because they’re both personal cards that earn Chase Ultimate Rewards points
- You can not downgrade the Citi Premier℠ Card to the American Airlines AAdvantage MileUp℠ Card because they aren’t in the same family (one earns Citi ThankYou points and one earns American Airlines miles)
You’ll also find that many airline and hotel credit cards can’t be downgraded. They don’t have a no-annual-fee equivalent.
You Might Be Forfeiting a Welcome Bonus
Downgrading Is Not Automatic
When you request a downgrade, the bank reviews your account and decides if you’re eligible. Banks typically require your account to have been active for at least 1 year before downgrading.
Downgrading Is Easy!
I’ve downgraded cards in the past with Chase (and I think Barclays) simply by sending a secure message through the bank’s website.
I’ve seen some data points saying Chase has insisted you call them if you want to downgrade, but I’ve been successful as recently as 6 months ago. Just state the card you have, as well as the appropriate no-annual-fee version of the card, and they should message you back in a couple days to confirm the change. That’s it!
Check out this guide on how to send the banks a secure message.
I’d love to hear your experience downgrading credit cards. It’s a great way to ditch the annual fees without any negative consequences to your credit score!
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