Guide to credit card product changes
Your life doesn't stay the same and neither should your credit cards. Milestones such as marriage, parenthood or a new job can change how you spend money. What's more, the COVID-19 pandemic has significantly impacted almost everyone's costs in some way, and, as a result, the credit card you used last year might not fit your needs today.
While a travel card may have been ideal pre-COVID, a cash back card might be better if you're staying close to home nowadays. Or perhaps you have a card with a high annual fee, but you find yourself no longer using all the benefits that offset that cost. Or, perhaps your bank has introduced a new credit card or changed the features of an existing card and that card would be a better fit for your lifestyle. These are just a few examples of why it may make sense to switch credit cards.
However, before you run out and apply for a new card, consider whether a product change might be a better option. Many credit card issuers will allow current customers to change their account to a different card without requiring an application or credit check.
Although there can be disadvantages to a product change, this option can be a simple way to save money on fees and transition to a card that provides better rewards for your new spending habits.
What is a product change?
A product change is simply moving your account from one credit card to another offered by the same company or bank.
For example, let's say you have the Citi® / AAdvantage® Platinum Select® World Elite Mastercard®, and, since you're traveling less, you'd like to downgrade to the no-annual-fee American Airlines AAdvantage MileUp℠ Card instead (Citi is a CardRatings advertiser). A product change would move your existing account from the annual fee Platinum Select® card to the no-annual-fee MileupSM version instead.
This is different than submitting an application for a new MileupSM account and closing your other card, and, in many cases, is a better option. It's generally easy to accomplish with a call to your bank's customer service line.
Pros and cons of a credit card product change
A product change can be beneficial for a number of reasons, not the least of which is convenience. However, you should also be aware of the potential drawbacks. Here's a look at the pros and cons of a credit card product change.
Pro: A hard credit pull isn't needed.
When you apply for a new credit card, in most cases an issuer will request a copy of your credit report. Known as a hard credit pull, this inquiry can lower your credit score. Assuming you're approved for the card, the slightly lower score usually recovers or even improves within a few months, but what if you don't have a few months? What if you need a different credit card AND to apply for a car or home loan all around the same time. Conventional wisdom is to avoid applying for new credit cards right before you plan to apply for another type of loan due, in large part, to the credit pull.
However, there is no hard pull conducted for a product change. Since you already have an existing account, your card issuer has already accessed your credit report and knows your payment history. They can simply shift your existing account to the new card.
Pro: Maintains credit history.
The length of your credit history makes up about 15% of your FICO credit score, and new credit has a 10% impact. Since a product change doesn't close your existing account or open a new one, you don't have to worry about either of these factors being negatively impacted. This is particularly good news if the card you're looking to change also happens to be among your oldest accounts. If you, for instance, opened a card just after college and have long since moved on to different card needs, it benefits your credit score to have that lengthy credit history even though you no longer like the benefits offered by the card. This is a classic example of a good time to think about a product change rather than a new card application and closing the old account.
Pro: Opportunity to lower fees.
Lowering fees is a major reason to consider a product change. That is especially true if you find yourself rarely using a card with a high annual fee.
For example, Chase Sapphire Reserve® is a fantastic card for frequent travelers; however, if the COVID-19 pandemic has you staying home, there may be no reason to pay the hefty annual fee (though, Chase has announced lots of stay-at-home geared features to add value during this time so it's completely acceptable to hang on and dream of travel days ahead). That said, downgrading to the Chase Sapphire Preferred® Card, with its $95 annual fee, may make sense. Just remember that you wouldn't be able to upgrade back to the Sapphire Reserve® for at least a year (we get into that in one of the cons below).
Pro: No impact on Chase 5/24 status.
Anyone who's been in the rewards cards world for a while knows about Chase's unpublished 5/24 policy. As a general rule, the company won't issue a new card to anyone who has opened five or more credit card accounts, from any issuer, in a 24-month period.
A product change, however, doesn't involve opening a new account so it shouldn't count toward your 5/24 status. Since Chase is known for its generous welcome offers and lucrative rewards programs, maintaining your ability to be approved for their cards is an important positive associated with product changes.
Con: Card choices may be limited.
Card issuers will likely limit product changes to only those cards with similar rewards structures. For instance, you may be able to move your account between the various Marriott Bonvoy credit cards offered by Chase, but a product change to a different co-branded card, such as The World of Hyatt Credit Card, will likely not be allowed. Likewise, you can't switch between personal and business cards even if those cards utilize the same rewards systems, such as Membership Rewards® or Chase Ultimate Rewards® points.
Con: You'll miss out on the signup bonus or intro APR.
While there are some exceptions with targeted upgrade offers, the biggest drawback to a product change is that you generally can't take advantage of any introductory offers.
Let's say you currently have the Chase Sapphire Preferred® Card, but you're intrigued by the new rewards structure of the updated Chase Freedom Unlimited® card – 5% cash back on travel through Ultimate Rewards®, 3% back at drugstores, 3% back at restaurants and 1.5% cash back on your other purchases. This card also offers $200 cash back (that's 20,000 Chase Ultimate Rewards® points) if you spend $500 in the first three months of card membership as well as 5% cash back on grocery store purchases, up to $12,000 spent, in the first year (excludes Target and Walmart).
While downgrading your existing Sapphire Preferred® to a Freedom Unlimited® shouldn't be a problem, don't expect to earn that bonus or the grocery store cash back bonus with a product change. You aren't considered a "new cardholder" when you complete a product change so you aren't eligible for the new cardholder bonuses and perks. For the record, that includes any intro 0% APR period that may be offered.
Con: Product changes aren't available immediately.
Many issuers require your account to be open a minimum period of time – typically a year – before you can change your product. One reason for the restriction may be to avoid paying out large welcome bonuses to new cardholders only to have them downgrade to a card with a lower annual fee immediately after collecting their reward.
Similarly, once you change your card, you won't be able to change that card – either as an upgrade or downgrade – for a period of time, again, likely one year. That means if you downgrade your premium travel card during COVID times because you aren't traveling enough to use it, be aware that you won't be able to upgrade back to the premium card if travel opens up again this summer and you want to take part.
Con: Possibility of lost rewards
If you are switching products within the same family of cards – such as between the Chase Freedom cards or Chase Sapphire cards – you probably don't have to worry about losing rewards. However, if you are moving from a travel card to a cash back card, or vice versa, there is a chance you might lose whatever points, miles or cash you've accumulated. Be sure to ask if and how your rewards will be affected before initiating a product change.
How to change your credit card
If you decide to pursue a product change, you'll need to contact your card issuer. Before you do that, though, be sure you know to which card you'd like to switch. If you think you might lose rewards by making a product change, consider transferring points or miles to a partnering program, if available, or redeeming any available cash back.
Some card issuers may allow you to request a product change via an online chat, but be prepared to call and speak to a customer service representative. Explain the change you would like to make and confirm what happens to your current rewards if approved for the switch.
Your account number and login info should stay the same after a product change, but double-check with the representative to be sure of these details. In a few weeks, you should receive a new card. Also, keep in mind that your account number and your credit card number aren't the same. Your new card will have a new card number, so you'll want to make sure you update any auto payments you have associated with the old card number.
Product changes can be an easy way to lower fees and switch to a card with a rewards structure that makes more sense for your current spending habits. The next time you want to update the credit cards in your wallet, consider the pros and cons of a product change before making a snap decision to apply for an entirely new account and cancel your old one.