Updated: Apr 01, 2024

To Downgrade or Upgrade Your Credit Card: Which is Best?

When deciding on a credit card upgrade or downgrade, there's plenty to consider in finding a card that fits well with your spending habits and lifestyle.
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You may not even realize it, but your credit card issuer may offer a higher- or lower-tiered credit card that you can switch to.

The key to being happy with any credit card account is to find a card that fits well with your spending habits and lifestyle.

When deciding on a credit card upgrade or downgrade, there's plenty to consider.

While switching from a basic card to a premium credit card may entail better rewards and another rung up the credit ladder, it is not a step that should be taken lightly.

It could very well be that you don't need premium services.

To save money, you may want to downgrade to a less expensive card that offers less.

If your current card works for you, then an upgrade isn't necessary.

But if you want more from a card, or you want to build up your credit history, then comparing premium options you qualify for will help you find the right card.

Generally, premium cards require a higher credit score and stronger income levels than standard offerings.

For the qualified consumer, these credit cards offer a range of specialized services above and beyond the expected services of a standard credit card.

These features are fairly standard for premium cards, with each level increasing the value of the benefits and more exclusive options available depending on the card and the issuer.

Simply put, the more premium the credit card you are maintaining, the more premium the benefits and financial offers you could receive.

The most obvious benefit to a premium card is the potential for a higher credit limit.

Because these cards require a higher credit rating, cardholders are often allowed more financial freedom, with some platinum cards even offering no set spending limit.

Another advantage to upgrading your credit card is that when the account is kept in good standing it will also improve your credit score.

This means that you could become eligible for even better credit cards and other financial products like home loans.

Having a no-annual fee premium credit card which you will keep for a long time is a good way to increase your credit score and build a relationship with a bank.

The Case for Upgrading Your Credit Card

You should consider all the available options before deciding on a credit card upgrade or downgrade.

You may want to ask for an upgrade to do the following:

  • Move from a secured to an unsecured credit card
  • Enter a better rewards program
  • Access special insurance programs and concierge services
  • Lower your interest rate
  • Increase your credit limit

Sometimes, such as when a student graduates from college, a credit card company may offer an upgrade.

In most cases, the consumer needs to initiate the process.

That process can vary depending on the credit card company.

Some may have an online form that can be completed to make the request while other companies may not make upgrade options as obvious.

That doesn't mean upgrades aren't available; you may just have to call and ask.

After approval, there may be a lag between when the old card is closed and the new card is issued.

Other than that, the process of upgrading should be relatively seamless.

Information from the old card is transferred to the new card, although a new account number is issued.

The only action needed by you is to update card data for automatic billing.

Skip the Add-on Services

Financial professionals say that many of the add-on services that come with upgrades aren't worth the price.

Credit card companies make extra money by selling credit-monitoring, fraud-protection or identity theft prevention services to customers.

But it's not always clear if they offer real protection to consumers.

In the past, the government has fined major credit card providers for add-on service scams.

You can monitor your credit on your own, by ordering copies of your credit reports  for free.

You're entitled to a free report each from Equifax, Experian and TransUnion each year.

This means that you can order a credit report every four months -- by rotating through the three credit bureaus -- to search for suspicious account openings or other signs of fraud.

Consequences of a Credit Card Upgrade or Downgrade

Upgrading a credit card can affect your FICO credit score slightly, depending on how the bank reports the new account and whether it triggers a hard inquiry.

Even with a ding from a credit check, you're not going to do much damage to your score by upgrading, unless this card is the oldest or only card in your wallet and the bank reports the upgrade as a closed and reopened account.

Credit history accounts for 15 percent of your credit score and your oldest card is the most crucial element in establishing that.

If your credit history rests on this card, it's a good idea to call customer service to find out how they report these upgrades and whether they will do a credit check that will result in a hard inquiry, also known as a "hard pull," on your credit report.

Of course, an increase in available credit can also improve your score, and may at least partially offset points lost with a credit check.

That's something else to keep in mind -- whether an upgrade significantly increases your available credit overall.

Also, keeping the old account open can be one way to lower your credit to debt ratio and boost your credit score.

The Case Against Upgrading Your Credit Card

Other authorities on credit pose economic arguments against increased card usage.

They say the problem with all of these great credit card "deals" lies solely in who ends up paying the price in the end.

Who is behind every single one of these cards, they ask? A bank... and banks do not offer perks for free.

Someone always pays for them.

If the Great Recession should teach the American people anything, the critics say, it's that the banking industry is not on our side.

We still feel the results of this today as larger banks continue tightening policies, raising fees, and introducing new fees for previously free services.

Everyone needs to understand that the banking industry wants to encourage the increase in card usage.

It makes them partners in every single card transaction that occurs, and they will be getting a piece of the action for each and every swipe.

Because each time a card is swiped, the business that just accepted your card is paying a fee to the bank that issued it.

Often these fees are steep and are the cost of doing business in America today.