How to Downgrade Your Credit Card to Drop the Annual Fee

Many major card issuers will let you downgrade your card.

A young consumer calls his credit card company to downgrade.
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 Carlina Teteris / Getty Images

Rewards credit cards have lucrative benefits but often charge steep annual fees. As long as your spending and rewards earnings outpace what you pay in charges, you might not mind your annual fee. However, as your spending habits change, it might not be reasonable to hold on to a credit card with a higher cost-benefit ratio.

Rather than closing your rewards credit card, you might be able to downgrade to another credit card with a lower or no annual fee within your card issuer’s product line. All it takes is a little research and a phone call to your credit card issuer.

Reasons to Downgrade Your Credit Card

There may have been a time where paying a high annual fee was worth it, like if you traveled a lot and needed access to premium travel rewards. However, as the COVID-19 pandemic reduced travel spending in 2020 and 2021, travel-dependent rewards and annual fees might not make as much sense. 

Note

In March 2021, nearly 60% of consumers didn’t feel comfortable flying yet, and around 50% weren’t ready to stay in a hotel, according to accounting firm Deloitte’s State of the Consumer tracker. 

A pandemic isn’t the only catalyst for reduced spending. Other lifestyle and financial changes—like a job loss or new addition to your family—may warrant spending cuts that no longer justify using a card with an annual fee.

Pros and Cons of Downgrading

Before you make the call to downgrade your credit card, consider both the advantages and disadvantages. You might ultimately decide that downgrading isn’t the best option for you.

Pros
  • Save money on the annual fee.

  • Keep the rewards you’ve earned.

  • Protect your credit score from new inquiries.

Cons
  • You’ll lose premium benefits.

  • You’ll earn fewer rewards.

  • No welcome bonus on the new credit card.

Pros Explained

Save money on the annual fee: The biggest advantage of switching to a no-fee credit card is that you save money on the annual fee, which can be more than $400 if you carry a premium travel rewards credit card like the Chase Sapphire Reserve. It makes sense to save on the fee if you can no longer afford it or you’re not able to capitalize on the benefits.

You may be able to keep your rewards: Downgrading to another credit card within the same card family might allow you to keep the rewards you’ve accumulated, and even continue earning rewards.

Protect your credit score: Closing your credit card can hurt your credit score if you’ve had it for many years. Downgrading your card instead of closing it allows you to keep the same credit line and doesn’t affect the age of the account.

Cons Explained

You’ll lose your premium benefits: Downgrading your credit card means that you’ll lose access to many of the perks and rewards that came with the higher-fee credit card. Consider the benefits you have enjoyed before finalizing your downgrade decision.

You’ll earn fewer rewards: A no-fee credit card will likely have a lower rewards structure, paying out a smaller number of points for the same amount of spending. If your overall spending has decreased, you’ll find yourself earning only a fraction of the rewards you previously accrued.

No welcome bonus on the new credit card: If you were opening up a brand-new rewards card, you could earn a sign-up bonus on your initial spending. You typically won’t have the same opportunity when you downgrade your account. However, because welcome bonuses are available for new cardholders who haven’t opened an account in the past 24-48 months, there’s a chance you wouldn’t qualify anyway.

How to Make the Switch

Before making a final decision, check out your credit card issuer’s website to get an idea of the credit card you’d like to downgrade to. Once you identify the card you want to switch to, do the following: 

  • Give your credit card issuer a call at the number on the back of your credit card. 
  • Explain that you’d like to remain a cardholder, but your spending needs have changed. 
  • Request to switch your credit card to another in their product lineup. 
  • Tell them which card you want to downgrade to.

Important

Before you make the switch, confirm whether your rewards will transfer. If you’ll lose your rewards when you downgrade, use them before making the switch. Redeeming for a statement credit or gift card is fast and easy.

Once the product change is complete, your credit card issuer will send you a new credit card with a new credit card number.

If your annual fee is coming up, and downgrading isn’t an option, it may be worthwhile to cancel the credit card completely to avoid the fee—particularly if you can’t afford to pay it.

Examples of Downgrade Options

While every card downgrade requires your issuer’s permission, it helps to know some of the options you have among the major credit card issuers. The following tables use Capital One and Chase cards as examples of what you can expect when you downgrade.

Capital One

Capital One’s downgrade options are easy to spot, because they all share the same feature: the addition of “One” to the name of the card without the higher annual fee:

Capital One Savor vs. Capital One SavorOne
 

Capital One Savor

Capital One SavorOne
(Downgrade)
Annual fee $95 $0
Rewards rate 4% back on dining and entertainment, 2% back at grocery stores, 1% on everything else 3% back on dining and entertainment, 2% back at grocery stores, 1% on everything else
Perks comparison Access to special Capital One events, extended warranty on purchases, travel accident insurance Access to special Capital One events, extended warranty on purchases, travel accident insurance
Capital One Venture vs. Capital One VentureOne
  Capital One Venture Capital One VentureOne (Downgrade)
Annual fee $95 $0
Rewards rate 2 miles for every dollar spent 1.25 miles for every dollar spent
Perks comparison Fee reimbursement for Global Entry or TSA PreCheck programs, secondary auto rental insurance, travel accident insurance, extended warranty on purchases Secondary auto rental insurance, travel accident insurance, extended warranty on purchases—with some limitations

Chase 

Chase’s travel cards are good candidates for downgrades, as there are downgrade options among premium and non-premium travel cards:

Chase Sapphire Reserve vs. Chase Sapphire Preferred
  Chase Sapphire Reserve Chase Sapphire Preferred (Downgrade)
Annual fee $550 $95
Rewards rate 10 points per dollar on Lyft rides, 3 points per dollar spent on travel, dining, and grocery stores; 1 point per dollar on everything else 5 points per dollar on Lyft rides, 2 points per dollar spent on travel, dining, and grocery stores; 1 point per dollar on everything else
Perks comparison Complimentary Lyft Pink, Priority Pass Select, and DoorDash DashPass memberships; $300 annual travel credit; fee reimbursement for Global Entry or TSA PreCheck programs, up to $120 off on a Peloton subscription Complimentary DoorDash DashPass subscription, up to $60 off on a Peloton subscription
United Explorer Card vs. United Gateway Card
  United Explorer Card United Gateway Card (Downgrade)
Annual fee

$0 1st year, $95 after

$0
Rewards rate 2 miles per dollar spent on restaurants, hotels, United, and meal delivery services; 1 mile per dollar on everything else 3 miles per dollar spent on groceries, 2 miles per dollar spent on United and commuting, 1 mile per dollar on everything else
Perks comparison Fee reimbursement for Global Entry or TSA PreCheck programs; complimentary first checked bag; two complimentary United Club passes per year; coverages for rental cars, lost or delayed luggage, trip cancellations, and purchases; 25% back on in-flight purchases 25% back on in-flight purchases

Key Takeaways

  • Whether you should switch to a cheaper credit card depends on whether you’re earning enough rewards to justify the annual fee. 
  • If you already have a stockpile of rewards, make sure you won’t lose them when you downgrade. Otherwise, redeem your rewards before making the switch. 
  • Confirm with your credit card issuer that the downgrade won’t require a hard credit check, to avoid any impact on your credit score.
  • Downgrading your card allows you to keep your card’s credit history.