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Guide to downgrading your luxury travel card: what to consider

People will be traveling a lot less in the era of COVID-19. What does that mean for your high-annual-fee rewards cards?


Travel has ground to a halt during the coronavirus crisis. Does that mean you should ditch your high-end travel credit cards? You can cancel your card if you want to, but there are additional options to consider that are considerably less permanent.

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Credit card issuers like Chase, American Express and Citi have introduced several innovative new rewards credit cards and cardholder perks over the last few years, and consumers have mostly applauded these changes.

Unfortunately, cards with robust benefits tend to come with higher annual fees that users can only justify if they actually use the perks they get in return. But until early February of this year, it wasn’t too difficult for frequent travelers to get excellent value from benefits like airport lounge access or annual travel credits.

Fast forward to March. As the coronavirus took hold, travel on airplanes and cruise ships came to a screeching halt. From there, restrictions only tightened as the majority of states issued stay-at-home orders that prevent most of us from going anywhere.

All of a sudden, most people are at home for the long haul and cardholder benefits geared to frequent travelers have definitely lost their luster. Will Americans be able to travel for the remainder of 2020? Almost nobody knows for sure, but it’s easy to imagine that most people will be traveling a lot less.

With that in mind, you may be wondering if you should ditch premium travel credit cards like the Chase Sapphire Reserve or The Platinum Card® from American Express. According to the experts, you can cancel your card if you want to, but there are additional options to consider that are considerably less permanent.

See related: Preparing for future travel while trapped inside

Take a holistic look at your credit card benefits

Kathleen Porter Kristiansen, who covers travel and rewards for Triple Passport, says it’s important for consumers to remember that rewards and travel perks aren’t the only benefits you can get from a credit card.

For example, you may have signed up for the Chase Sapphire Preferred Card in order to earn points for travel in the Chase Ultimate Rewards program. However, you may not realize you have other consumer benefits from this card you can access, including purchase protection against damage or theft and extended warranties.

Purchase protection against damage or theft could come in handy if you’re doing most of your shopping online and need protection for, say, a new laptop you purchase so you can work at home. And extended warranties could easily save you hundreds or thousands of dollars if a large purchase you make winds up breaking down within the extended warranty time limit.

With the extended warranty coverage on this card, you’ll be reimbursed for up to $10,000 per claim and up to $50,000 maximum per account. This coverage would make the $95 annual fee on this card seem downright reasonable if you needed to use it.

Either way, it makes sense to look over all your cardholder benefits before you decide if an annual fee is truly worth paying at the moment.

See related: Credit cards with the best extended warranties and shopping protections

Ask your card issuer to waive or reduce the annual fee

Benji Stawski, who writes about credit cards for The Points Guy, says you can also ask your card issuer to reduce the annual fee or extend some sort of retention offer.

Fortunately, some card issuers have already taken steps to reduce the burden of high annual fees for their customers. This includes Chase, which already reduced the annual fee by $100 for Chase Sapphire Reserve cardholders who have an account renewal date coming up.

Stawski notes that there are reports of American Express giving some Amex Platinum cardholders a statement credit outright in lieu of the Uber credit. (Amex executives noted in the company’s April 24 earnings call that a number of cards would get product refreshes designed to earn rewards on stay-at-home services, such as food delivery and streaming.) That makes sense — the $200 annual Uber credits this card offers are doled out on a monthly basis, and you lose any credits you don’t use.

“If you can get some benefits in the form of a statement credit or a partial refund of an annual fee then that would be better than canceling a card,” says Stawski.

Consider downgrading your credit card

Really, the best option if you’re struggling to justify high credit card fees is downgrading your card instead of canceling altogether. There are several reasons why this option makes so much sense, including the fact that downgrading your credit card won’t have any negative impact on your credit score.

Closing a credit card account, on the other hand, has the potential to damage your credit score since you would potentially increase your credit utilization by closing a card. This factor makes up 30% of your FICO score, so closing a card could have a bigger impact than you realize.

John Cabell of J.D. Power offers up another reason to consider downgrading your card — the bank can likely do a product change without a hard inquiry on your credit report. This means you could potentially move your available line of credit from a luxury card with a high annual fee to a cash back credit card with no annual fee without having to apply for a new card.

“Of course, there are no guarantees you will automatically get the deal you want, but it may be worth asking,” says Cabell.

According to travel expert and credit card journalist Jason Steele, there’s a final reason to consider downgrading.

“This gives you the option to upgrade when you resume traveling,” he says. “Otherwise, you could be trapped by rules preventing you from reapplying for a card you recently had.”

As an example, the fine print on Chase Sapphire credit cards says they are not available to current cardmembers of any Sapphire credit card, or previous cardmembers of any Sapphire credit card who received a new cardmember bonus within the last 48 months.

This means that if you canceled a Chase Sapphire Reserve card, you would have to wait four years before applying again.

See related: Chase Sapphire Reserve: Is it worth it?

How to downgrade your credit card to a new product

When it comes to figuring out how to downgrade your credit card, the steps are the same no matter what card issuer you have.

Generally speaking, you will call your card issuer using the number on the back of your credit card and ask. However, you can also try online chat with card issuers that offer this option, such as American Express.

It might help to have an idea of the card you hope to downgrade to, which you can determine by searching among cash-back and rewards credit cards from the same issuer.

Cabell also says to keep in mind that you may have trouble getting through right away.

“Many consumers are already thinking about these changes, so the line for phone or digital interaction may be long … hours or even days,” he says.

If you want to downgrade your credit card before a large annual fee is due, however, you’ll need to be persistent and find a time to get through before the due date hits for the statement period in which the annual fee was charged.

Should you wait it out?

Cabell says it may be worth hanging on to your travel credit card since travel will eventually return. At that point, “we all will want to get out of the house,” he says.

Steele agrees it can be difficult to justify high annual fees in the time of the coronavirus, but you need to think about the big picture, too.

First, you want to look at the rewards earning structure because that doesn’t change much even if you aren’t traveling, he says.

For example, the Chase Sapphire Reserve is still offering 3X points on dining, which applies to delivery and takeout even when you’re not paying for travel.

“You can also look at any changes that are being made to make the cards less travel-focused,” he says.

For example, the Chase Sapphire Reserve now offers 10x total points on Chase Dining purchases through Chase Ultimate Rewards when you make prepaid restaurant reservations, order takeout or join our virtual cooking events that you should be able to use right now.

Finally, you should consider how long it will be until you start traveling again.

“If you think there’s a decent chance you might resume domestic travel this summer, then missing just two or three months of use shouldn’t necessarily kill the value of the card,” he says.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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