Your spending habits will change over a period of time and credit card offers also keep changing over a period of time. The credit card which you have been using over the past will not fit your requirements. Once you choose your best credit card that fits your needs you can close the old credit card. It may happen that you may lose the remaining rewards and deals on your old credit credit card.
There is an option to upgrade your credit card by “product change” . This is a way for upgrading a credit card for the present credit card which is within the same issuer of the credit card. This can happen without closing the credit card and opening the new credit card.
Simply call the credit card company and request for the availability of options and express your interest in swapping credit cards with product change of credit card. The credit card company will provide you with the options. Below are the reasons as to why you may want to “product change” a credit card.
- Avoid annual fee
- Get relevant benefits
- Change the card but continue the rewards you earned
- Change the card but not account history
- Credit limit maintenance
- Avoid hard credit card inquiries
- Incentive to switch
1. Avoid annual fee
There is a small reason for paying an annual fee if you are using a credit card very rarely. In this situation the best option is to downgrade your credit card where you can avoid paying annual fees on the credit card. Since your usage of credit cards is very limited you can go for a no fee credit card where you can save money on the annual fees. The new credit card issued will have a very less reward program. Since the credit card usage is limited and zero annual fees there will be very limited rewards on credit card.
2. Get relevant benefits
Over a period of time you will see a change in your spending habits. By changing your card you can unlock previous unavailable credit card features. When you upgrade your credit card the credit card company will provide you with additional benefits.
Upgrading a travel card to a higher version will attract you with a more special status where you will enjoy loyalty programs, additional travel benefits and much more. When you downgrade your card it will reduce the relevant benefits on the card.
3. Change the card but continue the rewards you earned
When you close the credit card you will lose the rewards on the credit card. When you choose the option of product change you can hold on to the points and continue using the upgraded card. Sometimes it may happen that the point values may get changed.
A general sign up points, travel benefits, loyalty programs and other benefits which exist on the card, once you upgrade the card these benefits will continue as it will be issued by the same company provided the upgraded card terms and conditions are inline with the old card.
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4. Change the card but not account history
Pay history and duration of the card that you have been using the credit and various other factors will be tracked on the credit score. Keep the credit card account active and standing for years if you do not need to pay for the annual fees. When you downgrade the card you will maintain the same account history. The account history will continue to be the same with the same numbers.
5. Credit limit maintenance
Credit utilization or the amount of credit that you are using on the credit card. It is suggested that you use only 30 percent of the credit limit that is allowed by the lender during the billing cycle. When you close a credit card and spend on other cards the same then it will negatively affect your credit score over a period of time. You should keep your credit card open by upgrade or downgrade and this will allow you to have the same credit limit.
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6. Avoid hard credit card inquiries
The credit card issuing companies have a process of enquiry when they issue a credit card. Hard enquiry is most commonly performed when you apply for a credit card. When a hard enquiry is performed, the credit score will reduce a few points. When you request for a change in product it will perform a switch in a card there by credit card inquiries are not performed.
7. Incentive to switch
The credit card companies will entice customers to switch the credit card by offering them incentives. A few thousand miles on credit cards or attractive offers will be provided by the credit card company. A switch on credit cards will require annual fees; this deal with offers and miles will encourage customers to switch the card.
Take away
There is a good option of credit card swap instead of closing the credit card account and opting for a new credit card. By doing this you can avoid annual fees and hard inquiries on your profile.
A Product change credit card will provide you with the best option where you get the benefits and also not lose the incentives on the credit card. You can also continue to use the credit card with the same history and reward points.
About the author
Vinay Kumar Goguru is a finance professional with more than 8 years of diverse experience as a researcher, instructor and Industry work experience with both public and private entities. Prior to MyMoneySouq, he spent 6 years in Berkadia, It's a commercial mortgage banking company. He has a "Doctoral Degree in Commerce" and two master's degrees with a specialization in Finance, one as Master of Commerce and other as Master of Business Administration. He has written several articles on personal finance, published by different International journals. He loves traveling, reading and writing is his passion. He has a dream of writing a book on his favorite finance topics.
