5 Good Reasons to Downgrade Your Credit Card

Credit cards with annual fees can be worth it, since they tend to have more benefits. But sometimes, after you've had a card for a while and gotten the sign-up bonus, you may not be sure if you want to keep it.

Fortunately, you don't necessarily need to cancel your card. Many card issuers allow you to downgrade your credit card, which means switching it to another with a lower annual fee, or no annual fee at all. You get to keep the credit card account open this way, which can be good for your credit score.

A downgrade still means sacrificing some benefits, so it can be a tough decision. If you're not sure whether it's the right decision, here are the best reasons to downgrade your credit card.

1. It has several benefits you're not using

It only makes sense to pay an annual fee if you're saving even more money from the card's benefits. If you're not using those benefits, then it could be time to downgrade.

Now, some credit cards, in particular the top travel credit cards, have a ton of features. This isn't to say that if you can't use absolutely every benefit your card offers, you should downgrade it. But if half or more of your card's perks are going unused, you might not be getting your money's worth.

2. You're tired of paying the annual fee -- or you can't afford it

You may just decide that you don't want to shell out money every year for a credit card, especially if it's a high-end card costing $250 or more. Or maybe you're no longer able to comfortably afford the annual fee.

Whatever the reason, remember that you're under no obligation to continue paying for a credit card. You can downgrade or cancel it at any time. And if the annual fee is causing financial problems for you, then you should definitely make a change.

3. You found another credit card you like more

There are lots of great cards out there, and new ones come out on a regular basis. That's why it's recommended to check out the best credit cards every now and then, even if you already have a card, to see if there's a better option available.

If you find another credit card you like, and you start using it often, then you may want to downgrade your older card. This is often easier than trying to get your money's worth from two cards with annual fees.

4. The card issuer has made changes you don't like

With any credit card, features can change. Sometimes it's for the better, but not always. A card issuer may get rid of a feature that you liked or raise the annual fee on your card. It's disappointing when your credit card gets less useful to you, but you don't need to just grin and bear it. You can downgrade your card and look for a new one.

5. Your lifestyle has changed

If your lifestyle has changed, the credit card that was a perfect fit five years ago might not be anymore. Maybe you've gone from traveling all the time to staying closer to home, so that travel rewards card isn't as useful as before. Or you're paying an annual fee for a credit card with big grocery rewards, but your kids have moved out and you're no longer spending as much on food.

There's nothing wrong with downgrading a credit card. If you decide to do so, just call your card issuer at the number on the back of your card. You'll be able to see what your downgrade options are and switch to a card that costs you less.