Downgrading Cards before Annual Fee
 

Hi, I'm new to the whole frequent flying game and am wanting to get started but am weary about card churning due to my position in life. I have no debt but have a short credit history. I am trying to build my credit so that I can take out a mortgage within the next year or two. I don't want to churn cards so that my credit won't take any kind of hit but I do want to open up a new card (I currently have one with my bank) to decrease the percentage of my credit limit used. To do this I want to open a new card that waves the first annual fee and take advantage of rewards but downgrade the card (not cancel it) when the annual fee is due next year.

What credit card companies have people been most successful with when trying to downgrade to a no fee card?

I think it depends on the card but usually they will charge you the pro-rated difference at the time of the downgrade. So if you're annual fee is 450 and you cancel halfway through the year, they'll charge you 225.

both the hilton citi visa (50k bonus) and the Hilton amex (40k bonus) offer no fee ever. Its only hilton points but 50k pts will get you one night in a nice hilton or 2 nights in an average hampton inn. also the amex erans 3 pts per dollar and 6 pts per dollar at gorcery, gas, drugstores, and hilton properties

The Hilton Honors card doesn't look to be a bad option. Does anyone know of any airline cards that are fee free?

Welcome! Fee-free airline cards are what you seek? The Delta Skymiles Amex Options card is, but it only gives you 1 mile per $2 spent. Likewise with the Citi Bronze AA mastercard

I think that you can just open a card you like, get the bonus miles, and convert to a no-fee version after just shy of a year. This strategy worked for most cards I've gotten other than the Continental card. Now that the Continental card is a United MP Explorer, I'm not sure if there is a no-fee version available or not.

Downgrade to $0 fee or cancel card?
 

Is it more valuable to downgrade a card to a $0 annual fee card and maintain the account aging in our credit file, or is it better to cancel the card and apply directly for the $0 annual fee card with a sign-up bonus?

How important is account aging?

If the card is downgrade and the CC# stays the same, will this prevent churning the original card, versus canceling the card would allow churning the card?

depends on a number of factors probably. How many other cards do you have? How long have you had the card you want to cancel? Are you sure you are eligible for a bonus on the new card?

Lately I have been calling to cancel and they offer me a statement credit to cover the annual fee if I make a couple of transactions or spend a small amount on the card. So I have been keeping most of mine unless I need the credit line to open a new/different card.

IMHO, downgrading is a losing approach since you get no bonus miles when you downgrade.

Much better to get a few new, no fee for first year cards and pile up the bonus miles. :D

Close old cards as annual fee comes along. @:-)

If you read my first post, I'm trying to build my credit history quickly. For this, cancelling cards and getting new ones every few months is not a smart decision.

I actually always do this, I keep most cards (depending) for maybe 10 months. I keep a spreadsheet documenting when they would initiate the fee, then cancel at that point or request a wavier.

1. Can't build credit history quickly, takes a while.

2. Not so very nice to suggest someone trying to help you didn't read your original post. Niceness counts on FT.

IMHO, it is a very smart decision (unless your credit score really stinks) to cancel and get more bonuses. I have been doing it for many years and have helped many with weak credit history to do the same. I know well that many post on the net that this hurts your score--maybe, but the hit, if there is one, is tiny. And, you can always get the new card(s) before closing the old one.

Bonuses are where the "free" trips in F are.

I had both of the Citi AA cards (AMEX and Visa personal). Called to cancel, didn't like the retention offers, so I decided to downgrade both to the bronze to keep the credit lines and avoid the annual fee. This was the first week of August, with the annual fee coming due at the end of the month. They told me the new bronze card would come in October (and the AA cards would close out then), which worried me since my annual fee was due before then. The agent (for both cards) assured me that I would not be charged the annual fee since I was downgrading.

Well, both cards got hit with the annual fee on my last statement! I was on vacation out of the country when I noticed it, and now that I'm back was going to call in today or tomorrow. Checked again today and noticed that one card has another transaction post with a credit for the fee amount. Still nothing on the next, so I might wait a few days to see if it takes care of itself.

Just figured I'd throw out my experience in case it happens to others.

Not a straightup airline card.

The Fidelity Investments American Express Card earns 2 WorldPoints per $1 spend.

WorldPoints can be redeemed for cash, 1 point = 1 cent
or transfer to Air Canada AeroPlan at 1:1 ( Air Canada is a member of Star Alliance )

And it there is no annual fee