Do you have a credit card that just doesn’t fit in your life anymore?
You may have a credit card with an annual fee that is too high, or you may think you’ve outgrown your “basic” credit card and are ready for one with a better menu of benefits.
Whether you’re looking to move up or down the credit card ladder, you may be a candidate for a product change request.
In its most basic definition, this is asking your card issuer to issue you a different card to replace your existing one without applying for a new line of credit.
Policies for product changing vary from issuer to issuer. Some of them will let you hop around, others have a “card family” path you must follow, and others simply won’t allow you to do it at all without a new application.
In this article, we’ll talk more about what a product change is, go over some questions you should ask yourself to see if you’re a candidate for one, and also take a look at the pros and cons of completing one.
Table of Contents
What Is a Credit Card Product Change?
Pros and Cons to a Product Change
Questions to Ask Before Completing a Product Change
What Is a Credit Card Product Change?
Let’s start this conversation by making sure we’re all on the same page.
A credit card product change is when you ask your card issuer to switch your existing credit card to a different card they offer without opening a new account or closing the one you already have.
This is often referred to as a credit card “upgrade” or “downgrade” depending on the direction you’re moving.
Your current credit line and account history are usually carried forward as a part of this requested change. You may even keep the same account number.
This is different from applying for a new credit card and does not cancel your existing credit card. There are some pros and cons to requesting a product change versus submitting a new application and canceling an old card. Let’s take a look.
Pros and Cons to a Product Change
Now that we have a better understanding of what a product change accomplishes, it’s time to decide if it’s actually a good idea.
Reasons for requesting an upgrade or downgrade can vary.
A downgrade is a common way to get out of a high annual fee card without canceling the line of credit. An upgrade is usually most useful when seeking a higher tier of benefits without applying for a new card.
Like most things in the credit card space, there is room for nuance and strategic debate. It largely comes down to individual financial factors that don’t always lend themselves to blanket advice.
With that in mind, I think it’s best to lay things out in a “pros versus cons” analysis so that you can determine how they apply to your personal situation.
Pros to a Product Change
You can “right a wrong” in your wallet. If you’re paying too much for an annual fee on a card that you don’t use enough to justify, using a product change to downgrade to a lower or no-annual-fee card is a great way to eliminate that fee.
It is better for your credit score than canceling your existing card. You will avoid the potential hit to your score from losing the account history and available credit utilization on the existing card. This is something to especially consider when you’re trying to ditch a high-annual-fee card and cancellation seems like the “easy way out” of the situation. You may find a path to a low or no-annual-fee option as a product change.
You likely will avoid a new “hard inquiry” on your credit report. A product change will usually allow you to get a fresh card without going through application hoops like you would with a new card. This is especially useful when it comes to avoiding inquiries on your credit report. Too many of those will hurt your credit score.
Cons to a Product Change
You may not be able to get the card you really want. Just because you’ve decided that you no longer want the existing card in your wallet doesn’t necessarily mean the card issuer will change it to the card you want instead. Many issuers have a rigid “card family” rule for product changes that will require you to stay within a small subset of their card offerings for changes.
You may miss out on lucrative sign-up bonuses from your “new” card. Since a product change is not a new application for a card, oftentimes you’re deemed ineligible for whatever the going welcome offer is on your new card. With travel cards, these offers can often be worth more than $500.
Downgrading could cost you benefits you use. We talked about the benefits of eliminating an unwarranted annual fee as a pro to a product change, but it’s worth talking about the cons of a downgrade, too. Premium travel cards are loaded up with travel protections, premium benefits, lounge access and more. Changing to a card with a skinnier menu of benefits could eliminate perks you legitimately used.
Questions to Ask Before Completing a Product Change
Now that you understand what a product change is and the pros and cons of making one, I have a list of questions you should ask yourself (or your card issuer) before deciding whether to move forward with a request.
Do I actually use my existing credit card’s benefits and rewards program? If the answer is yes, you may want to consider keeping things the same.
Am I even eligible for a product change at this time? Some card issuers require that you hold your existing card for a period of time (at least a year, in many cases) before you’re even eligible to request a product change.
Does my card issuer offer a card better suited to my spending habits? If so, that may be a card worth requesting a change. But, as we’ve mentioned, many card issuers require that a product change be within the same “family” of cards. So check with them first to see if moving from the card you have to the card you want is even possible.
Am I comfortable with the annual fee situation? Do some quick math to understand the upside of rewards and benefits you’d use versus the cost of a card’s annual fee. You may have a card that is too expensive for your usage, or you could desire a card that has an annual fee that is just too expensive for how you’d use it. The “math needs to math” on any potential change request.
Once you clear these basics, some other situational questions that could be on your mind include:
Will I miss out on a lucrative bonus by product switching instead of submitting a new application?
Do I have a reason to protect my credit score (buying a house, refinancing a mortgage, etc.) by making a product change rather than a new application?
If you’ve decided you may be a fit for a change, you can call the number on the back of your card and simply ask what options are available.
Good questions to ask before committing to a product change include:
Will a hard inquiry to your credit occur?
What happens to your existing rewards balance?
If downgrading, can you get a prorated refund for a recently paid annual fee?
Bottom Line
A product change is often the smart move when you want to escape an annual fee and avoid the hit of closing an account.
It can also be an option for people who want to “upsize” their credit card without risking a new credit inquiry.
In either case, just make sure the new card actually fits your spending and that the math of a potential change works in your favor.
Have you completed a credit card product change before? We’d love to hear about your experience in the Clark.com community.
The post Should You Product-Change Your Credit Card Instead of Applying for a New One? appeared first on Clark Howard.