What Is A Product Change And Should You Do One?

As you read about loyalty programs and learn about the credit cards that can help you travel the world for less, you will eventually come across someone who mentions that they just did—or are planning to do—a product change for one of their cards.

Although many people have no idea that this is even an option, product changes are quite common among those who are trying to maximize their travel rewards. Needs change, as do benefits on specific cards, and making a product change may be the best way for you to move forward with your credit card portfolio.

What Is a Product Change?

Each credit card a bank offers is considered to be a different product. When a new card is announced, the bank is launching a new product. When a card is no longer available for new applications, a product has been discontinued.

When you apply for a credit card, you are applying for an individual product that the bank offers. They may have 10 or 15 different credit card types available, but you are only applying for a specific card and the benefits that it offers. But what happens when you no longer want to keep that credit card open?

Instead of canceling the card outright when you don’t want it anymore, many banks will allow a customer to do a product change. You may sometimes hear a product change referred to as an upgrade or a downgrade.

Simply put, a product change is the act of switching from one type of credit card to a different type of credit card at the same bank. Making a product change is much easier than putting in a new application, and in most cases, your credit limit will remain the same for the new card.

Rules For Product Changes

Each bank that issues credit cards has its own rules for product changes. Some banks don’t allow product changes for certain cards at all. But overall, there are a couple of product change rules that are fairly consistent.

One rule that is easy to remember and true for pretty much every bank—You cannot do a product change from a personal credit card to a business credit card, or vice versa. Banks consider personal and business cards to be in different classes, for obvious reasons, and they have likely assigned you some sort of credit limit that may be different for your personal and business cards. Because of this, you aren’t allowed to switch cards between the two.

Another rule that many banks go by is that when you do a product change, the card you change to must be in the same family of cards. What constitutes a family of cards may differ by issuer, but generally it means that the cards earn the same type of rewards. This could be rewards directly from the bank like Chase Ultimate Rewards or Citi ThankYou Points, or it could be a family of co-branded cards offered in partnership with an airline or hotel program.

It isn’t always easy to find information online about whether you can do a product change from one specific card to another. It doesn’t help that one bank’s method may not be the same as another’s. In many cases, the only way to get the correct answer is to call your bank and ask if you can make the switch.

Effects On Your Credit Score

As with making any decisions about your credit cards, when deciding if you want to make a product change or not, you should also think about the effects the decision will have on your credit score.

Canceling a credit card can hurt your credit score. The most likely way your credit score will be impacted is in your credit utilization. That is, the amount of your overall credit you are currently using. When you close a card, you lose access to that line of credit, meaning your total credit limit will decrease, and your utilization rate will increase. Since your credit limit is usually maintained by doing a product change, you can avoid this credit score drop by making a product change instead of canceling.

On the other hand, if you have a high credit limit on the card you are changing from, the bank may take the opportunity to pull your credit report to make sure that they want to continue to offer you so much credit. This is not done very often, but if it is a concern for you, you should ask if your credit report will be pulled before agreeing to make the product change.

When requesting a product change, you also don’t have to worry about impacts on the average age of your credit accounts. A product change will be considered the same account for this purpose.

Why Do a Product Change?

There are a few different reasons that you may want to do a product change with one of your credit cards. A product change is great for when you are done with one card and are looking to get another.

The most common reason that people do a product change is that they’ve had a card for at least a year and they don’t want to pay the annual fee when it comes due. By doing a product change to a card with a lower annual fee or even no annual fee, you can save yourself some money without canceling your card. You can also keep the age of your account on your credit report when you product change a card as opposed to canceling.

Another reason people typically make a product change is that they no longer get enough benefit out of a card and want to take advantage of the benefits of a new card. This is especially common if a card has a great set of benefits and a person is not eligible to apply due to their application history or bank rules.

Finally, as we talked about above, doing a product change allows you to avoid the negative effects that canceling a card may have on your credit score. You always want to do as much as you can to maintain a high score.

Why Not Do A Product Change?

One of the biggest reasons that you may not want to make a product change over to a specific card is that by doing so, you are giving up any welcome bonus that the card typically offers to new members. You probably don’t want to miss out on a large pile of points just to avoid closing a credit card.

If a bank has rules about not holding more than one card in a family or sets a time limit between applications for another card in a family of cards, you need to make sure that your product change won’t disqualify you from another card. This may not only make you ineligible in the next month or two, but it could disqualify you for multiple years from getting a new card that you want.

Loss of benefits may be the most obvious reason to not do a product change away from a certain card. Before deciding to change a card, take the time to look over the benefits that come along with it and make sure you are not getting more value out of the card than you are paying in annual fees. Even if a card has an annual fee in the hundreds of dollars, you may be getting enough benefit from it that you shouldn’t be scared away when the fee comes due.

Lastly, if the bank decides to do a hard pull of your credit report when you ask for a product change, this may have a couple of adverse effects. First, a hard pull will usually cause your credit score to drop a few points. Second, if there is an additional inquiry on your credit report, it may make it more difficult for you to get approved for a loan or another new credit card in the near future.

Bottom Line

As you can see, there are both positives and negatives to think about any time you are looking at making a product change for one of your credit cards. It is important to think through the consequences of making the change and be sure that you want to go through with it before taking any action.

On top of that, once you’ve made the decision to do a product change for one of your cards and picked the credit card you want to change to, banks still have their own rules about whether they will let you do it. The card may have to be in the same family of cards or have the same co-branding partner for the bank to let you make the change.

Remember though, even if you want to make a product change that you think might not be allowed, it never hurts to ask. You might just find a representative who has the power to do what you want. Then you will be on your way to enjoying the benefits of your new card.