How to know when to upgrade or downgrade your credit card

Written by: Tim Devaney
• Edited by:Charles McArthur-Johnson, Content Coordinator, Credit & Debt
• Updated •5 min read
This date may not reflect recent changes in individual terms.
A young man sits at a computer with his card and phone in hand, ready to call his credit card issuer to discuss his card upgrade and downgrade options.Image: A young man sits at a computer with his card and phone in hand, ready to call his credit card issuer to discuss his card upgrade and downgrade options.

In a Nutshell

Are you in the market for a new credit card? Instead of applying for a new card, consider whether downgrading or upgrading your existing account would work for you.
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When you close your credit card, both your credit utilization ratio and the average age of your accounts — two factors that affect your credit scores — could take a hit.

But that doesn’t necessarily mean you’re stuck with a bad credit card. If you’re thinking about closing your account — for example, maybe because you can’t afford its annual fee or you want to earn more rewards — a better option might be a credit card downgrade or upgrade.

What is a credit card downgrade?

A credit card downgrade could help you switch to a more affordable card without closing your account and opening a new card.

Many rewards cards come with higher annual fees, which might be waived the first year but typically are charged after 12 months of holding the card. If you need to switch to a credit card with a lower annual fee at some point, you can request a credit card downgrade.

Although your account remains the same, you’ll get a new credit card, and maybe a new card number, when you downgrade.

Here are a couple of things to keep in mind: You can’t downgrade business cards to personal cards. You can’t downgrade from one company’s card to another company’s credit card, either.

What’s the difference between a credit card downgrade and upgrade?

There are a couple of specific situations in which a downgrade or upgrade may get you the card you want without having to apply for a new one.

  • You may want to downgrade your rewards card if you’re looking for a lower annual fee or interest rate.
  • On the other hand, if you’re looking to earn rewards for everyday spending or travel, you may want to upgrade your no-frills card to a rewards card offered by your card issuer.

In both situations, you may be allowed to keep your original account open so that you can continue to build credit from that account while, in many cases, avoiding the hard inquiry that typically comes with filing a new credit card application.

What is a credit card upgrade?

If you’re still using a starter credit card but spend more money now than you used to, you might benefit by upgrading to a rewards card. A credit card upgrade could allow you to get a new card, possibly with better benefits and rewards, without requiring you to apply for a new line of credit.

When you upgrade, you may be able to keep the same credit account, but you’ll receive a new card in the mail.

Why should you upgrade instead of applying for a new card?

You can always apply for a new card if you want, but upgrading your credit card may help you avoid a hard inquiry on your credit reports — which can help protect your credit scores, as a hard inquiry has the potential to lower them.

If you applied for your first credit card and had no credit history (or poor credit), your card options may have been limited. You might not have qualified for top rewards cards with big sign-up bonuses and fancy benefits.

Once you have some positive credit experience under your belt, you might qualify for better cards. But you may still want to keep your first credit card to retain your length of credit history on your credit reports. That’s where a credit card upgrade comes in.

How do I upgrade a credit card?

If you’re looking to move to a better rewards card or one with enhanced benefits, an upgrade — or product change — with your current issuer can be a smart move.

Here’s how to proceed.    

  1. Contact your credit card issuer and ask whether it allows a product change (the term for switching from one credit card to another from the same issuer).
  2. Confirm with the issuer whether you’ll keep the same account number, avoid a hard credit inquiry and retain your account history.
  3. Compare the upgraded card’s annual fee, benefits and rewards against your spending habits to ensure it’s the right choice for you.
  4. If you decide to move ahead, request the upgrade and monitor your account to confirm the transition went smoothly.
  5. Update any autopay or recurring payments to the new card number, if it changed.

How do I know if I’m eligible to upgrade or downgrade my credit card?

There’s no hard-and-fast rule. Each credit card issuer has its own policy for determining whether you qualify for an upgrade or downgrade.

The best way to find out if you’re eligible is to call the issuer and ask. Many credit cards have a number listed on the back.

Generally speaking, credit card issuers may be more willing to accommodate customers whose accounts are in good standing. An issuer may look at factors such as your credit reports and scores, payment history, spending habits, debt, income, employment and overall banking relationship.

What should I watch out for when switching cards?

When you upgrade or downgrade your card, there are a few potential drawbacks to keep in mind.    

  • No sign-up bonus — Because you’re keeping the same account, you’ll likely miss out on any welcome offers that might be available when establishing a new one.
  • Loss of rewards points or miles — Depending on how the issuer handles the transition, you might lose some of your earned rewards. Ask what happens to your points before switching.
  • Credit-utilization impact — Changing cards can affect your available credit and therefore your utilization ratio, which is a key factor in scoring models. In general, the lower your credit utilization ratio, the better.

Bottom line

If you’re not satisfied with your current card, consider upgrading or downgrading before you apply for an entirely new credit account. This could help you save money (or earn more rewards) and continue to build your credit history at the same time.

After all, it can’t hurt to call your credit card issuer and ask what options are available to you. But make sure to double check that you can keep your original account and whether your issuer requires a hard inquiry, as the processes for upgrading or downgrading credit cards can vary.

*Approval Odds are not a guarantee of approval. Credit Karma determines Approval Odds by comparing your credit profile to other Credit Karma members who were approved for the card shown, or whether you meet certain criteria determined by the lender. Of course, there’s no such thing as a sure thing, but knowing your Approval Odds may help you narrow down your choices. For example, you may not be approved because you don’t meet the lender’s “ability to pay standard” after they verify your income and employment; or, you already have the maximum number of accounts with that specific lender.

About the author: Tim Devaney is a personal finance writer and credit card expert at Credit Karma. He’s a longtime journalist who prides himself on being a good storyteller who can explain complex information in an easily digestible wa… Read more.