When to downgrade my Chase Sapphire Preferred card

What is a credit card downgrade? 

A credit card downgrade is when you switch to another card without closing your account and opening a new card. This prevents you from hurting your credit score for a new credit card by doing a hard inquiry for your credit. Instead, you can just switch credit cards without changing anything at all. Typically, the new card comes with lower fees and/or fewer benefits. 

>>Related: What is a Hard Inquiry for Credit Check?

When should I downgrade Chase Sapphire Preferred?

It’s easy to justify paying the $95 annual fee for the Chase Sapphire Preferred card for its premium travel and dining rewards, excellent sign-bonus, and extra perks. However, if you find yourself unable to take full advantage of its various benefits, paying such a fee may not be worth it. Given the 25% rewards bonus valued at 1.25 cents for each Ultimate Rewards point upon redemption, you would have to spend about $3,800 on travel or dining each year just to cover the annual fee. 

>>Related: When is it worth it to have a Chase Sapphire card?

Furthermore, canceling your credit card can hurt your credit score. Rather than canceling, downgrading to another card allows you to preserve your credit limit and lengthen the age of your account, both of which positively contribute to your credit score. The high credit line allows you to keep your debt-to-credit ratio low while the age of your account shows that you are a responsible cardholder. By simply downgrading, you’ll be able to keep your account history and your credit line so that no damage to your credit score will occur. 

Canceling your account and applying for a brand new card would violate Chase’s 5/24 rule. This rule denies applicants who have opened more than five credit cards – Chase credit card counting as one of them – over the past two years. If you downgrade and switch to a different Chase card, you won’t have to use one of your limited five slots because it does not count as a new account. 

>>Related: Why You Should Never Cancel Your Credit Card

From the Chase Sapphire Preferred card, you have several options to downgrade to such as the Chase Freedom or Chase Freedom Unlimited. Neither of these cards charge an annual fee and offer different rewards and benefits that may be better suited for you. For instance, the Chase Freedom offers a generous 5% cash back on rotating categories, such as gas and groceries, as well as a modest sign-up bonus. This card is great for those who want to prefer a classic cash back credit that will allow them to maximize their spending on everyday purchases.  

To see the side-by-side comparison between Chase Freedom and Chase Freedom Unlimited, check out this article!

What should I be cautious of when downgrading? 

While downgrading your credit card comes with various benefits, there are also drawbacks that you need to be aware of. For one, Sapphire Preferred cardholders who downgrade to a Chase Freedom card are not eligible to earn a sign-up bonus from their new cards. To earn a sign-up bonus on a card again, you have to cancel or downgrade your Chase Sapphire Preferred card before reapplying, given that you have not earned a bonus on that card in the last 2-4 years. 

Another disadvantage of downgrading your Chase Sapphire Preferred card is that you will lose the ability to transfer the Ultimate Rewards points you’ve earned to hotel and airline partners. Therefore, to protect your rewards, consider transferring them to a hotel or airline partner before the downgrade. Alternatively, you can also transfer your points to a household member if they have an eligible card. 

Benefits of Downgrading

• No Annual Fee: The Chase Freedom and Chase Freedom Unlimited are available for no annual fee, meaning you can stop paying for the card when you know you aren’t using all the perks you get in return. 

• General rewards earnings: The freedom offers 5% cash back on up to $1,500 in combined bonus category purchases each quarter(activation required), plus 1% back on everything else. On the other hand, the freedom unlimited offers a flat 1.5% cash back on every purchase. Both cards enable you to earn rewards on day-to-day shopping expenditures. If you find yourself not spending as much on travel it may be best to downgrade your card to get the most value. 

Disadvantages of Downgrading

• Foreign Transaction fee:  Both the Freedom and Freedom Unlimited chard a 3% foreign transaction fee

• No introductory APR period: You’ll miss out on the 0% APR offered on both cards for purchases for 15 months. Instead, you will be immediately subject to the variable APR of 14.00%-23.74% on both the Freedom and Freedom Unlimited.  

What are the terms for downgrading my card? 

How to downgrade: 

You can downgrade your Chase Freedom to Unlimited by calling customer service at 1-(800) 432-3117, entering your account information, and asking to speak to a customer service representative when prompted. You can also upgrade from the Chase Freedom to Unlimited online. Log in to your account, and send a secure message stating your request to downgrade. From the main menu, under “Connect with Chase,” click “Secure Messages,” and then “Compose Message.” You will usually get a response in a few hours.  

Eligibility: 

The Sapphire Preferred account must be in good standing and at least 12 months old in order to request a product change.  

Fee Refund: 

You’ll receive a full refund of the Sapphire Preferred annual fee if you downgrade within 60 days of paying the fee. After 60 days, you are ineligible to receive a refund.

Account terms: 

Your account number, credit limit, and other account information will remain the same. Downgrading will not show up on your credit report and will not affect your credit score.  

Points Value: 

Chase Freedom and Chase Freedom Unlimited points are worth 1 cent each, while Chase Sapphire Preferred points are worth up to 1.25 cents apiece 

Bottom line

If you find that the Chase Sapphire Preferred falls short of meeting your needs and goals, you may want to consider downgrading. By downgrading to Chase Freedom or Chase Freedom Unlimited, you can avoid paying unnecessary fees, improve your credit score, and take advantage of certain features better suited for you. 

Want to directly apply for these cards?

Apply for Chase Sapphire Preferred online here.

Apply for Chase Freedom Unlimited online here.

Apply for Chase Freedom online here.

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