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, options might include upgrading, downgrading or applying for a new card. Learn how these options work and whether upgrading or downgrading is even the right way to think about it.

What you’ll learn:

• Some issuers allow cardholders to change from one card to another without closing their account or triggering a hard inquiry.

• These types of credit card upgrades and downgrades are commonly known as product changes. 

• The terms upgrade and downgrade can be misleading. Swapping your card for one with fewer rewards and a lower annual fee, for example, can still be an improvement.

• A new credit card may offer an introductory APR or an early spend bonus. But applying for the card typically involves a hard inquiry, which can temporarily impact your credit scores.

A credit card upgrade is a type of product change, meaning you swap your current credit card for a different card with the same issuer. Product changes generally don’t require a hard inquiry, meaning your credit scores won’t be affected.

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

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

When you swap cards, you might have to forfeit some of the benefits of your current card. And once you switch, you might not be able to take advantage of some of your new card’s benefits, such as an introductory APR offer or an early spend bonus. Your interest rate may change, too.

Here are a few scenarios that might make you consider upgrading your card: 

• You don’t earn rewards with your current credit card and are interested in maximizing your rewards potential.

• You do earn rewards, but they don’t align with your spending habits. For example, if you have a travel rewards credit card but aren’t traveling much, you may want to switch to a cash back rewards credit card.

• You want to upgrade a secured credit card to an unsecured credit card.

• A different card offers benefits better suited to your lifestyle.

• Your credit scores have increased, and you think you’ll qualify for more credit cards.

When you switch to a credit card with the same issuer that has a lower annual fee or fewer benefits, it’s still a product change. But it’s commonly referred to as a downgrade. This term can be misleading, though. It doesn’t mean you’re settling for a worse credit card. It may just mean the card suits your lifestyle and spending habits better. Even if it means letting go of some benefits or rewards.

When you downgrade a credit card, you’re not opening or closing a credit card account. Like with an upgrade, you’re simply transferring your existing line of credit to a new card from the same issuer. Your credit card and account numbers typically remain the same. 

Keep in mind that you may have to have your account open for a year before you’re eligible for any product change. But it all depends on the issuer’s policies.

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

• You aren’t taking advantage of the benefits of your current card.

• You’re not using your current card enough to justify its annual fee.

Each card issuer has its own policies and processes for upgrades and downgrades. But to change your card, it can help to have an on-time payment history and be in good standing. Issuers may also consider credit scores and credit history when making decisions about upgrades. 

Here are a few general guidelines to consider: 

1. Compare cards. Take the time to research different cards, compare your options and pick a card that’s right for you. Some things to consider include fees, rewards, eligibility requirements and benefits.

2. Check for card offers. Find out if you’re already eligible for any card offers. Capital One cardholders can check for offers by signing in to their Capital One account. They can also ask Eno, your Capital One assistant, for help finding offers.

3. Accept an offer. If you’re approved for an upgrade, you can simply choose to accept the offer. If you’re able to keep your existing card and account number, you can keep using your account as normal and start enjoying your new benefits right away.

A credit card upgrade isn’t the only option. If you want to keep your current card but want more spending flexibility, you may be able to request a credit limit increase.

Instead of upgrading or downgrading your credit card, you may also consider applying for a new credit card. New accounts may be eligible for perks like an intro APR and welcome bonus offers. For example, new Venture cardholders can earn 75,000 bonus miles when they spend $4,000 within three months of opening their account. With an upgrade or downgrade, you may not be eligible for these benefits. 

And if you use your credit card responsibly, adding another line of credit could potentially help you improve your credit scores. This is because a new credit account raises your overall credit limit, which can help lower your credit utilization ratio. 

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 multiple credit cards within a short period of time can have a larger negative impact.

Whether upgrading, downgrading or applying for a new card is the best option depends on your circumstances. 

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 credit scores.

New to credit or looking for your next credit card?

• Check for pre-approval offers with no risk to your credit score.

• Earn unlimited 1.5% cash back on every purchase, every day with Quicksilver.

• Explore Capital One’s credit cards for building credit with responsible use.