I Just Downgraded 2 of My Credit Cards. Here's Why

A credit card doesn't need to be a lifetime commitment. And while you can close cards at any time, it's often better to downgrade them. That's when you change your current card to one with a smaller annual fee, or no annual fee at all.

I recently did this with two of my credit cards. By downgrading them, I'll save $645 in annual fees going forward.

Opting out of fees may seem like an obvious decision, but I didn't mind paying that much money. I saved much more than those cards cost me over the years. So, why'd I get rid of them? Here's how I decide when to downgrade my cards. If you have any with annual fees, it could help you determine if they're worth keeping.

These cards weren't offering enough value anymore

The overall reason why I downgraded these cards is because I realized I was no longer getting enough value to justify their cost. There were a few factors that contributed.

I've added other cards with overlapping benefits

I'm a big fan of travel credit cards, so I've used quite a few. I like earning bonus points with welcome offers and getting to take advantage of more travel perks. The problem with this is when you end up with the same benefit across multiple cards.

For example, at one point, I had three cards with airport lounge access. I could get into the same lounges with any one of those cards, so having that benefit on three of them didn't do me any good.

They didn't have enough unique perks to justify keeping them

I don't mind having the same benefit across multiple credit cards. You won't find a card with features that are completely different from what every other card has. If a benefit is popular with consumers, like airport lounge access, multiple credit card companies will add it.

Here's what I ask myself: Does this card have enough unique perks to outweigh the annual fee? If it does, then I'll keep it. If not, I'll downgrade it.

For example, one of my hotel credit cards includes an annual free night certificate and elite status with that hotel. Those are both valuable perks I don't get anywhere else, so that card is a keeper. But if the only unique perk a card has is an extra 1 point per $1 in a bonus category, or a spending credit I rarely use, that's not enough for me.

One of my cards had gotten more expensive and lost benefits

Credit card companies occasionally raise annual fees. They may also change or get rid of certain benefits. The worst is when they do both, charging you more and offering less.

That's what happened with one of the cards I downgraded. The annual fee had gone up by $100, and it lost some of the benefits that I liked about it. This was actually a blessing in disguise, because it made my decision easy. By the time I heard about another benefit getting axed, I knew it was time to downgrade.

How to downgrade a credit card

It's fast and easy to downgrade a credit card. Here's how to do it:

1. Pick a new credit card for your downgrade. Check the card issuer's lineup to see which card you want. Note that the card will need to be in the same product line as the old one.
2. Contact your card issuer and request the downgrade. You typically need to do this by phone, although some card issuers may let you do it by live chat. Let the representative know that you'd like a product change from your current card to the new one you selected.

If you're wondering which cards are in the same product line as your current card, it's normally the cards in the same rewards program.

For example, if you have a United Airlines card, you can downgrade it to another United card. You couldn't downgrade it to a World of Hyatt card, because United and Hyatt have different rewards programs. If you have a Chase Ultimate Rewards card, you can downgrade to another Ultimate Rewards card. When in doubt, contact your card issuer to ask what your options are.

Your card issuer may have a retention offer for you when you ask to downgrade. Retention offers are a special incentive to get a cardholder to keep their card. These vary, but common examples include bonus rewards or a statement credit. If you like the offer, you can accept it. If not, you can continue with the downgrade.

Downgrading a credit card is a good alternative to closing it. If you don't think the card's value justifies the annual fee anymore, then you can downgrade it to keep the account open at a lower (or no) cost.