Upgrading vs. downgrading your credit card

Have your spending habits and financial goals changed since you got your current credit card? Maybe you’re ready to start earning more rewards. Or maybe you aren’t using your card enough to justify its annual fee. Whatever the case may be, it could be time for a change. 

If you’re interested in a different card, upgrading, downgrading or applying for a new card might be options. Learn how they work, how they’re different—and whether upgrading or downgrading is even the right way to think about it.

Key takeaways

  • So-called product changes let cardholders transfer their current line of credit from one card to another with the same issuer without closing an account or triggering a hard inquiry.
  • Credit card upgrades and downgrades are types of product changes. 
  • The terms “upgrade” and “downgrade” can be misleading. Swapping your current card for one with fewer rewards and a lower annual fee, for example, can still be an improvement if it’s a better match for your needs and spending habits.
  • Applying for a new credit card may come with advantages like introductory APR offers and early spend bonuses. But new credit applications typically involve a hard inquiry, which can temporarily hurt your credit scores.

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What is a credit card upgrade?

A credit card upgrade is a type of product change. Product change is an industry term that refers to the ability to switch from one credit card to another card with the same credit card issuer. Instead of opening or closing an account, the existing account and line of credit are transferred. 

A product change also typically doesn’t require a hard inquiry. Applying for a new credit card typically does. A product change might also be worth investigating if you don’t think you’re ready for more than one credit card

What happens when you upgrade your credit card?

When you upgrade your credit card, you typically keep your existing credit card number and account number. But your card and account will be subject to the terms and conditions of the new card. If your new card earns rewards, for example, then you’ll be able to earn those rewards once you switch to the new card.

To upgrade, you usually need to have a good payment history and be in good standing. You might also need to have a certain credit score to qualify for an upgrade. That said, it’s important to note that credit card issuers set their own policies for product changes and eligibility.

If the card you want to upgrade to has an annual fee, you might have to have your account open for a full year before you can upgrade. That’s because the Credit Card Accountability Responsibility and Disclosure Act forbids credit card companies from increasing your annual fee within a year of opening your account. 

It’s also worth keeping in mind that you might have to forfeit the perks of your current card when you swap cards. And once you switch to the new card, you might not be able to take advantage of some of that card’s perks—like an introductory APR offer or early spend bonus.

When you might consider a credit card upgrade

If your current credit card no longer suits your spending habits and lifestyle, it might be time to consider a change. Here are a few scenarios that might make you think about upgrading your card: 

What is a credit card downgrade?

There’s another type of product change that’s sometimes called a credit card downgrade. But this term can be misleading.

When you swap your credit card for one with a lower annual fee, for example, you may also sacrifice some rewards earning potential. This may be referred to as a downgrade. But it doesn’t mean you’re settling for a worse credit card. 

Finding a card that is better suited to your specific needs and circumstances is still an improvement, even if it means switching to a lower rewards earn rate or letting go of some perks.

What happens when you downgrade your credit card?

Similar to a credit card upgrade, you’re not opening or closing a credit card account when you downgrade your card. You’re simply transferring your existing line of credit to a new card from the same issuer. And your credit card number and account number also typically remain the same.

Remember, you may have to have your account open for a year before any product change. But it all depends on the issuer’s policies.

When you might consider a credit card downgrade

You might consider downgrading your credit card for a few reasons. For example:

  • You aren’t taking advantage of the perks of your current card.
  • You’re not using your current card enough to justify its annual fee.

And remember, calling it a downgrade can be confusing. Swapping your current credit card for one that works better for you doesn’t mean you’re settling for an inferior card. Getting a card that’s more aligned with your specific needs is a smart financial decision.

How to upgrade or downgrade your credit card

If you’re interested in a product change, the first step is to contact your credit card issuer. It should be able to tell you whether you’re eligible for an upgrade or downgrade. They can also help you understand which cards you might be eligible for.

Your issuer may also proactively reach out if you’re eligible for an upgrade.

Applying for a new credit card instead of upgrading or downgrading

Instead of upgrading or downgrading your existing credit card, you may also consider applying for a new credit card.

New accounts may be eligible for perks like an introductory APR or bonus rewards that you can earn if you spend a certain amount within a specific time period. 

If you use your credit card responsibly, adding another line of credit could potentially even help you improve your credit scores by lowering your credit utilization ratio

But keep in mind that new credit applications typically require hard inquiries, which can temporarily impact your credit. A single hard inquiry will generally only lower your scores by a few points. But applying for too many credit cards within a short period of time can have a larger negative impact on your credit.

Upgrading, downgrading or applying for a new credit card in a nutshell

Ultimately, everyone’s situation is unique. And whether upgrading, downgrading or applying for a new card is the best option depends on your own circumstances. To find out if you’re eligible for a product change, check with your credit card issuer.

If you decide to apply for a new card, you can compare Capital One credit cards to find one that’s right for you. Then you can see if you’re pre-approved for card offers before you apply. Pre-approval is quick and won’t hurt your scores.

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