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Are you no longer using one of your credit cards? You may want to request a product change. Find out what to expect when you downgrade your credit card. 

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Credit cards are a valuable financial tool, but not every card in your wallet will meet your needs forever. There may come a time when you no longer utilize the benefits provided. When this happens, one option is to cancel the card. Another option is to downgrade it to a different credit card from the same issuer. We’ll explain what you can expect to happen when you do this and why you may want to go this route instead of canceling your card.

What is a credit card downgrade?

A credit card downgrade is when you downgrade an existing credit card that you have to one with a lower fee from the same credit card issuer. You can do this if the card issuer has another card that’s part of the same product line.

Some cardholders decide to downgrade a credit card when they have one with an expensive annual fee and no longer get value from the included perks. Switching to a credit card with a more affordable annual fee or no annual fee could be a win for some consumers. There are plenty of no annual fee credit cards to choose from if you’re on a limited budget.

One benefit to downgrading a credit card is maintaining your current credit card’s account history. When you switch to a lower-tier product, the account will remain open, so you won’t lose your history, which could benefit the age of your credit. Doing this could also help you maintain a lower credit utilization ratio, which is another important credit score factor.

However, when you do this, you’ll lose your current card’s benefits. If you switch to a lower-tier product, you may have fewer credit card perks available. You may also earn fewer rewards if it’s a rewards credit card. But if you’re okay with this, it could be a good move for your wallet.

How to downgrade your credit card

If you’ve been thinking about canceling one of your credit cards, you may want to consider downgrading it instead so you can maintain the account history. How do you downgrade a credit card? It’s easy to do by contacting your credit card issuer.

Before calling your credit card issuer, research available card options. Check to see if your card issuer has other cards available in the same product line. If so, ask if it will downgrade your credit card to an alternative product that you prefer.

If your downgrade request is approved, your credit card company will send you a new card, and your account will remain open. Your credit card issuer may deny your request, especially if no alternate options exist in the same product line. But often, the credit card company will be happy to approve your downgrade request to keep you as a customer.

Note: When you downgrade a card, you’ll be ineligible for any welcome bonuses for the new card. If you prefer to earn the new account bonus, a downgrade isn’t the right move for you.

What to do if a card downgrade is unavailable

You may wonder what options exist when you’re denied a downgrade. You can cancel the credit card. But keep in mind that this decision could impact your credit report.

Often, those with credit card accounts in good standing find that prior accounts remain on their credit report for some time, even years. But with time, old accounts can drop off your credit report. Canceling your card can also impact your credit utilization ratio, which impacts your credit score.

An alternative option is to continue using the credit card. If your card has an annual fee, you’ll need to decide if you feel comfortable continuing to pay it. Consider whether the fee will drain your checking account balance and whether you’ll benefit from the perks and rewards offered. Only you can decide the best option for your personal finances.

If your current card is no longer for you, that’s okay. Luckily, there are plenty of other credit cards to explore. To learn more, check out our list of the best credit cards.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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