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Downgrading a rewards card? You may be eligible for sign-up bonus


If one card becomes too expensive, consider applying for less costly versions — and you might even score a sign-up bonus. But be aware of credit implications

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Dear Cashing In,
Since 2001, my wife has had an American Express Platinum Delta SkyMiles card and a Chase United MileagePlus Explorer card. She also has a Victoria’s Secret card since 1999. Her credit rating is excellent. With the Delta Platinum card going up to $195 a year, we’d like to dump it.

One choice, I assume, would be to downgrade to a Gold Delta SkyMiles card. However, we’d rather cancel it so that she can get a Gold and sign-up benefits. Would she get those benefits? Or does already being a Platinum cardholder preclude her getting the sign-up bonus? Would her credit history take a dive if that account were closed? — Jason


AnswerDear Jason,
I’m a big believer in continually thinking about the cards you currently have and how they stack up against the cards that you don’t have. If your wife hasn’t made any changes to her credit card lineup in 15 years, it is definitely time to examine all the options.

To your credit, you have already started weighing the pros and cons of making such a move. The obvious advantage is that by switching cards, you gain a new card that works better with your spending habits and reward preferences. The downside is that you might experience a negative effect on your credit rating.

Because this fear of credit implications arises a lot regarding canceling one card and applying for another, I put that part of your question to’s credit expert, Barry Paperno, who writes our weekly “Speaking of Credit” column.

Credit scoring is complex, and figuring out the precise effect would require a little more information, particularly the balances on the United and Victoria’s Secret cards, he told me. The greater those balances, the bigger the hit your wife’s credit score will take when you close the Platinum card, because she will be using a higher percentage of her available credit. Credit utilization makes up 30 percent of a FICO credit score — the higher the utilization, the worse it isyou’re your score. There would also be a small effect from opening a new card.

However, assuming that her credit score is excellent, Paperno says the “worst-case impact would still be what I would call minimal — 10-15 points or so — which can be temporary as balances are reduced and/or the new card is added.”

To me, a minor temporary reduction in your wife’s credit score is a small price to pay for swapping the Platinum card for the Gold card, which has a smaller annual fee ($95, waived first year) and comes with 30,000 Delta miles and a $50 statement credit after spending $1,000 in the first three months. It also gives you priority boarding and a free checked bag, just like the Platinum does.

Even though your wife has the Platinum card, she should still be eligible for the sign-up bonus miles with the Gold card because they are separate cards. I put that question to American Express’ public relations department, but I did not receive a response. I think it is safe to assume she is eligible for those benefits, but you might want to double check when you apply.

Another option, as you mention, might be to simply call American Express and ask to downgrade your wife’s Platinum card to a Gold. That would cut her annual fee and avoid a hard pull on her credit. But the company might not be willing to do that, and she certainly would not receive those precious 30,000 Delta miles that she would if she just applied for the Gold card as a new card.

I think that approach is the best move here. A slight dip in her credit score for a few months is worth cutting an annual fee by $100 and earning 30,000 frequent flier miles.

See related:FICO’s 5 factors: the components of a FICO credit score, Rewards card switch: from fee to no-fee, When to close an annual-fee card


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