If you "downgrade" you are still opening a 'new line' of credit which will decrease your score for a few months. Even if it doesn't need a new credit check your credit would go down because the average # of years you've had credit will go down.

So downgrading is the same thing as just closing the account and opening a new fee-free card.. basically. So just ask yourself if you need another card.

I think having some non-fee cards are good so you can keep them for the long run and in a few years they will help increase your averaged 'credit history length' leading to a better score.

My friend has 40+ cards and his score is 810 and he's like 25. I think thats overkill but there ya go..

Not sure about the sign up bonus but since that is one of your oldest cards (I'm guessing) I wouldn't close it and most churnable deals work regardless if you cancel the old one or not.