A credit product change is the term used to refer to the changing of a credit card account from a product offered by a bank to a different product offered to you by the same bank. A credit product change is different than simply applying for a new credit card in a few ways. For one, it does not require that the bank perform an additional credit check. For another, it allows you to maintain your old account’s history. Here are a few pros and cons of performing a credit product change.
Pro: Allows a Downgrade to Cancel Annual Fees
Downgrading is the most common product change that occurs, and happens when a credit card that charges an annual fee is swapped out for one that doesn’t. For instance, if you’ve applied for the Chase Sapphire Preferred card then you’ll be charged $95 in annual fees, however if you want another card that earns just as much flexible reward points, or simply don’t want to deal with the annual fee then a product change will allow you to downgrade your card and cancel your annual fee. You will still be able to keep your old account’s history, as well as the credit line intact. However, you would lose the double earning rate on travel that you earn with Sapphire Preferred.
Con: You Will Not Earn Any Signup Bonus
All those lucrative bonus deals that come with signing up for a new credit card will not be offered to you if you are doing a credit product change. This can be a deal breaker for some people, as sign-up bonuses are often worth signing up for a new credit card in and of itself. However, you may still be able to receive product upgrades through a credit product change.
Pro: Gain Access to Better Rewards
If you have an old credit card that you don’t earn a substantial amount of rewards on then you may want to consider a product line change. This will allow to gain access to a new rewards card with a great rewards program without having the hard inquiry on your credit report. Instead of having to cancel your old card and then deal with two unneeded credit inquiries, a product change will allow you to keep your credit history and credit line, and still give you access to lucrative earning opportunities.
Con: You May Not Be Eligible
Due to a new consumer protection regulation that was passed with the recent financial reform law, several credit card companies are not willing to perform product changes within the first year that your credit line is opened. Keep in mind that the different credit cad issuers interpret the new regulation differently, and so your success will vary depending on the length in which you’ve held a credit card and what bank issued it to you.
Pro: Receive Product Upgrades
American Express usually issues product upgrades, however there are several different banks that offer the same incentive. For example you can receive 50,000 HHonors points from Hilton by upgrading your no sign-up fee American Express Hilton card to a Hilton Surpass American Express Card. The same goes for the American Express Gold Delta personal card, as you can upgrade it for a Platinum Delta card.
Con: Can Be a Hassle
Although credit line product changes are typically a straightforward process, there can be several things that get in the way of you successfully performing one. For instance, it is extremely important that you clearly identify the credit card that you are changing from and also changing to. Ensure that the bank representative understands exactly what you are talking about by giving them the last four digits of your bankcard number. It is crucial that you ensure that the bank representative understands that you are looking for a credit product change and not just wanting to apply for a new credit card. It is never a bad idea to ask the bank representative to confirm that your credit report won’t receive an inquiry from doing so. Keep in mind that they shouldn’t have any reason to ask for a Social Security number, and so if they do this may be a red flag that there is miscommunication.