The time to think about downgrading a premium credit card is when your annual fee is due and you don’t feel that the benefits you’re getting from the card are worth it anymore. There are many reasons to downgrade instead of just closing your account.
Perhaps the most compelling reason is to be able to keep your rewards and to continue to use the rewards program. There’s no reason to give up on a program and your points just because you don’t want to pay an annual fee anymore. Just about every issuer has a no-annual-fee card. We’ve compiled a list of the best no-fee cards on the market.
Another consideration is that you might not want to impact your debt to credit ratio, which is a critical component of your credit score. If you no longer have the credit line from that card in your credit report, it will increase your credit utilization.
In a previous post we talked about how to downgrade credit cards issued by Chase, Citi and American Express. Here are some ideas to help you decide which downgrading path to choose for the cards issued by Capital One, Bank of America, Barclays and U.S. Bank.
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Capital One Downgrading Options
The most popular Capital One card is Venture. While it has a $95 annual fee (waived the first year), it also comes with a great 50,000-mile sign-up bonus worth $500 and excellent earning potential. Every purchase you make with the card earns 2x miles, which is a 2% return.
And if you like to book through Hotels.com, you’ll get an incredible 10x miles through hotels.com/venture.
Capital One® Venture® Rewards Credit Card
- + Earn 2X miles on every purchase, every day. Plus earn 10X miles on thousands of hotels; learn more at hotels.com/venture
- Enjoy a one-time bonus of 50,000 miles once you spend $3,000 on purchases within 3 months from account opening, equal to $500 in travel
- Named ‘The Best Travel Card' by CNBC, 2018
- Receive up to $100 application fee credit for Global Entry or TSA Pre✓®
- Fly any airline, stay at any hotel, anytime; no blackout dates
- No foreign transaction fees
- + Miles won't expire for the life of the account and there's no limit to how many you can earn
I really like this card and the Venture program because you can use your miles to book any travel from any vendor. You aren’t tied to certain travel partners or a frequent flyer program. With award space getting harder to find these days, this is an incredibly valuable option to have in your wallet.
Frankly, it’s hard to do better if you don’t have a lot of flexibility in your travel dates and you often fly coach.
Get More Bonuses
If you’re a fan of the Venture program, you could always switch over one of Capital One’s business cards. They have great sign-up bonuses and earning potential, too.
The Spark Miles for Business is nearly identical to the Venture card, including the nice $500 sign-up bonus and double miles for all purchases. It does have a $95 annual fee, but it is waived for the first year.
Capital One® Spark® Miles for Business
- + Plus, earn 150,000 miles when you spend $50,000 within the first 6 months. Limited Time Offer
- Earn up to 200,000 miles. Earn a bonus of 50,000 miles when you spend $5,000 in the first 3 months of opening your account
- Earn 2 miles per $1 on every purchase, every day
- Miles won't expire for the life of the account, and there are no categories to limit where or what you buy
- $0 intro annual fee for the first year; $95 after that
- There's no limit to the amount of miles you can earn
- + Redeem miles for travel, cash back, gift cards and more
There’s a no-fee Business card, too: the Spark Miles Select. It earn 1.5 miles per dollar and comes with a $200 bonus. For a no annual fee card, that’s pretty good and might be the best choice for downgrading if you don’t want an annual fee anymore.
It’s Easy to Qualify for a Small Business Card
If you’re thinking that you don’t have a business and there’s no way you’ll qualify for one of these cards, guess again. It’s easy to get one. Just about any independent income counts.
If you sell some stuff on eBay or Etsy, for example, you’re in. Do you do a little freelancing from time to time? That counts, too. Think about it. I bet you make money on the side (or could easily do so if you wanted to qualify for a business card).
Other Capital One Options
There is a no-annual-fee version of the Venture card, but its not as good as other Capital One cards. The VentureOne has a good sign-up bonus worth $200, but it earns less than the other cards at 1.25 miles per dollar. It’s not a bad card, though. Particularly if you can’t qualify for a business card.
If you don’t have miles saved up in your Venture account, the Capital One Quicksilver cashback card is a better no-annual-fee choice than the VentureOne. You can get a $200 sign-up bonus, plus every purchase earns 1.5% cash back.
Capital One® Quicksilver® Cash Rewards Credit Card
- % Earn unlimited 1.5% cash back on every purchase, every day
- One-time $150 cash bonus after you spend $500 on purchases within 3 months from account opening
- No rotating categories or sign-ups needed to earn cash rewards; plus, cash back won't expire for the life of the account and there's no limit to how much you can earn
- 0% intro APR on purchases for 15 months; 14.74%-24.74% variable APR after that
- 0% intro APR on balance transfers for 15 months; 14.74%-24.74% variable APR after that; 3% fee on the amounts transferred within the first 15 months
- Pay no annual fee or foreign transaction fees
Bank of America Downgrading Options
Bank of America doesn’t have no-fee versions of its co-branded airline credit cards, such as Alaska and Virgin Atlantic, but it has a couple of nice cashback cards, and it’s quite liberal in terms of making product changes.
BankAmericard Cash Rewards offers 2% cash back at grocery stores and wholesale clubs like Costco, and 3% on gas for the first $2,500 of spend every quarter. You will also get 10% to 75% bonus cashback if you are a BofA banking customer.
Barclays Downgrading Options
Barclays Arrival+ is probably the most popular Barclaycard travel product, and there are three reasons why you might not want to cancel this card outright.
The first reason is simple: you don’t want to jeopardize your credit score.
The second is that you might still have some miles in your account. If you close the card you will lose them.
But there is also a third reason. Barclays has a Travel Community that allows you to earn miles by leaving travel reviews. Mind you, the rewards are small, and you won’t make millions, but the terms are easy enough. So if you like writing reviews on Trip Advisor, you might also like getting paid for it with Barclaycard.
Every little bit helps, and if you close your Barclays Arrival+ card outright, you won’t be able to participate and make some very easy miles.
Solution: Downgrade to the Barclaycard Arrival card. It has no annual fee, you get to keep your miles and you can participate in the Travel Community and earn more miles. This is a very easy and straightforward downgrading option with no downsides.
Other Barclaycard products might not be as easy to downgrade, primarily the Aviator cards. There is a no-annual-fee Aviator card, but trying to get an agent to downgrade Aviator cards is an uphill battle.
U.S. Bank Downgrading Options
With U.S. Bank, there is yet another reason to refrain from closing a card: if you have a U.S. Bank checking or savings account, carrying a credit card will help you avoid the fees. So you don’t have to guess and make sure your balance hasn’t gone below a certain threshold.
The bad news is that U.S. Bank generally doesn’t allow product changes. For example, you can’t generally downgrade an airline credit card like Air Mexico to a no-fee Cash+ card.
The good news, however, is that the two most popular U.S. Bank travel premium cards have their own no-fee alternatives.
The family of the Radisson Rewards cards include one business card and three personal One of the personal cards doesn’t have an annual fee.
The Radisson Rewards Visa Signature card has a $50 annual fee. The Radisson Rewards Premier Rewards Visa Signature Card carries a $75 annual fee. And the Radisson Rewards Visa has no fee.
The no-fee Radisson card is actually quite good. You’ll receive up to three free nights annually. You’ll get a night for every $10,000 you spend on the card.
Another popular premium product, the U.S. Bank FlexPerks Gold American Express card which also has a no-fee counterpart, the U.S. Bank FlexPerks Select+ American Express card.
While it only earns one FlexPerks point per dollar, they are worth more when you redeem them on airlines. For example, 20,000 points can buy you a ticket for up to $400.
Whichever card you are thinking about downgrading, always be proactive and research your options before making the call. There a lot of options if you’re looking for a card with good rewards and no annual fee.
Depending on your relationship with the bank, you may even get a retention offer that will include waiving the annual fee or compensating you for it in another way, like with bonus points or miles. Decide for yourself beforehand which card you want to be downgraded to and if there is an offer you can’t refuse.