Credit Card Options: Cancel, Downgrade, or Product Change

Deciding whether to cancel, downgrade, or product change a credit card can be a complex process. Before making a decision, it's essential to weigh the pros and cons of each option. ## Understanding Downgrading and Product Changing Downgrading a credit card involves switching to a card that earns the same type of rewards but has a lower or no annual fee. This option is ideal for individuals who no longer use their current card or want to reduce their annual fees. For instance, if you have a United℠ Explorer Card with a $150 annual fee, you can downgrade it to the United Gateway℠ Card, which has no annual fee and still earns United Airlines miles. Product changing, on the other hand, involves swapping your current card for one that earns a different type of rewards currency. This option is available with banks like Bank of America and Citi, which allow you to product-change a credit card to one that earns a completely different type of rewards. For example, you can product change the Air France-KLM World Elite Mastercard to the Bank of America Unlimited Cash Rewards credit card. ## Factors to Consider When deciding whether to cancel, downgrade, or product change a credit card, consider the following factors: * How long have you had this card? It's recommended to keep credit cards open for at least a year to preserve credit history. * What options exist for downgrading or changing the product? Know in advance what your options are to make your retention phone call simpler. * If you change to another card, could that limit your ability to receive a welcome bonus in the future? Some banks, like American Express, may block you from receiving a welcome bonus if you've had a card in the past. * Do you need to close a card with this bank? Banks like American Express and Capital One have limits on the number of credit cards you can have with them at any one time. * If you close this card, can you replicate its benefits with other cards? Be sure you know your card's benefits and if you'll lose anything important. * What offers would you accept to keep this card for another year? Think through possibilities in advance so you know what retention offers you would and wouldn't accept. * Will you lose your points or miles? If your card earns hotel or airline points, any points already transferred to your loyalty account are safe. ## Making an Informed Decision After considering these factors, you can make an informed decision about which cards to keep, close, or change. Remember that you are still responsible for paying any balances on your card, and you should check your closed accounts to ensure there are no unexpected charges. Ultimately, the decision to cancel, downgrade, or product change a credit card depends on your individual circumstances and financial goals. By weighing the pros and cons of each option, you can make a decision that best suits your needs.