Five Reasons to Upgrade Your Credit Card (and When to Apply for a New One)
Choosing your credit cards carefully can help you earn rewards—from points and miles to cash back—and get useful benefits (everything from DoorDash credits to airport lounge access) in exchange for your spending.
One way to take advantage of these kinds of additional benefits is to upgrade your existing card to one with more bonuses or better rewards rates (and often, yes, higher annual fees). To upgrade, simply call your card issuer and ask to switch your account to another card. Depending on the issuer, you may be limited to upgrades within a card family, such as moving from the Chase Sapphire Preferred card to the Chase Sapphire Reserve card.
However, in some cases, you may be better off sticking with the cards you have and adding a new card to the lineup instead. Here’s what to consider as you weigh your options.
When Should You Upgrade Your Credit Card Instead of Opening a New One?
You have a specific use for benefit rates or rewards.
Premium cards with premium benefits may be worth the increase in your annual fee, but only if you actually take advantage of those perks. It’s no use having a card that offers free hotel nights and early check-in if you always stay in Airbnbs when you travel, or a membership to services (like DoorDash, Instacart, or Lyft) you don’t use. use regularly. Likewise, switching to a card with a different rewards structure only makes sense if you’re spending enough in the relevant rewards categories.
You have access to a tempting upgrade offer
One of the benefits of a new credit card is an introductory offer, such as cash back or a significant points bonus, which usually requires a minimum spend for a certain period of time after activating the card. Some card issuers offer similar incentives to existing members when switching to another card in their portfolio. If you qualify for the upgrade offer, are still considering switching cards, and are aware of any increases in your annual fee, this could be a good way to get additional perks and better rewards rates. However, upgrade offers aren’t always as good as welcome offers, so you can earn a lot more by applying as a new cardholder.
You already have a large collection of credit cards.
Upgrading may be the best option if you already have several cards in your wallet that will help you make the most of your spending, and you just want the specific benefits that upgrading your existing card can offer. For example, you may not need another travel rewards card if you use the one you have frequently and the points or miles would be useful, but upgrading may bring additional travel-related benefits such as lounge access or credits for air tickets. Adding a new credit card also means you’ll have another bill to pay.
Your current card is valid for at least a year.
According to The Points Guy , if your current card has been in use for less than a year, it may not be worth upgrading or canceling it, otherwise your card issuer will try to refund the welcome bonus or any perks you’ve used. While this may not happen to you, it’s safer to use credit cards for a year or more before making any changes.
Are you worried that this will affect your credit score?
Updating your card likely won’t have much of an impact on your credit score, if any at all, since your credit isn’t subject to hard limits and you can still keep your account history. Applying for a new card may temporarily lower your score due to a hard pull on your credit, and will also lower the average age of your accounts. (However, your credit utilization ratio will also likely drop—unless you spend a lot more right away—by increasing your overall credit availability. An additional account can also help you build a history of on-time payments.)
When You Should Get a New Credit Card Instead
You can easily reach the threshold for receiving a decent bonus or starting offer.
The main benefit of opening a new credit card account is the ability to earn additional rewards, such as a one-time mileage payment, statement credit or bonus money. Welcome offers are usually given after you spend a certain amount on your new card over a period of several months, so a good time to apply might be when you have a large purchase coming up or you know you’ll spend enough to hit the threshold.
Do you want to add a card to your wallet?
While getting a new card doesn’t necessarily make sense if you already have a lot of credit cards, it can offer several important benefits. First, it can fill gaps in your rewards strategy, such as higher rewards rates in certain spending categories, earning miles on a specific airline, or earning luxury hotel status not offered by other cards. More cards often mean more rewards, and paying a few annual fees can be worth it even if you don’t spend a ton of money on that card to earn points and miles if you use other benefits. The new card also gives you options if one or more of your existing cards is lost or stolen.
You are not limited by card issuer restrictions
While product changes (upgrades and downgrades) are typically not subject to many restrictions, you may not be approved for a new card or may not be eligible for an introductory offer from certain credit issuers, depending on what accounts you already have or have had recently opened. Chase’s 5/24 rule prevents you from getting a new card if you’ve opened five or more new card accounts in the last 24 months, and you may have to wait even longer to qualify for a bonus on a new card in the same year . card family. American Express allows you to access the card-specific welcome offer once in your lifetime, so you can’t close the account and reapply later to get the bonus again, and upgrades count toward your lifetime limit.
You will lose accumulated rewards if you level up
If you’re considering upgrading an existing card (or downgrading it, for that matter), be sure to ask what happens to your existing rewards, such as your accumulated points and miles or unused benefits. You don’t want to lose access to your hard-earned points if you cut up your current card. In these cases, keeping the old card as is when opening a new account may make more sense.