Hey, it's Ernest from Trip Astute. In this video, we're gonna cover credit card
downgrade strategies and considerations, especially for those of you with a Chase
Sapphire card.
(light chiming music)
A few weeks ago I posted a video on deciding between the Chase
Sapphire Preferred and Reserve card. In that video, I mentioned that you can
always upgrade or downgrade between the Preferred and Reserve card. Though a few
people chimed in that there was another option which is potentially more
lucrative. However, before we get started, if you're new here, I want to welcome you
to our channel. Trip Astute is a travel channel that is focused on sharing ways
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sounds interesting to you, then consider subscribing to our channel. Getting back
to downgrades and upgrades, in my previous video, I suggested downgrading
or upgrading from one of the premium Chase credit cards as a strategy when
deciding to keep a certain. Though as some of our community members pointed
out, there is potentially a more lucrative way of doing it.
Big thanks to Steven and Justin for sharing their approach with us. Rather
than just upgrading and downgrading between the Chase Sapphire Reserve and
Preferred card, you can actually downgrade the card to either a Freedom or
Freedom Unlimited card, then reapply for the other premium card. This allows you
to earn the bonus again for the new card. If you were to upgrade or downgrade from
the Chase Sapphire Reserve or Preferred or vice versa,
you would lose the ability to earn the opening bonus which makes this approach
so much more lucrative. So, for example, if you had the Chase Sapphire Preferred
card for a few years but decided that you wanted the Sapphire Reserve, you
could downgrade your Sapphire Preferred to a Freedom Card and then reapply for
the Reserve card, assuming that you don't already have the Freedom and Freedom
Unlimited card. So this sounds great, right? Well, it's complicated. There are
definitely some things to keep in mind with this approach. Number 1: 5/24 rule.
Chase has one of the strictest rules when it comes to the number of credit
card applications that you've had in the past 24 months. If you've opened five or
more credit cards from any issuer in the last two years, then you could be
disqualified from getting another credit card from Chase until the
time has passed. For more information on the famous 5/24 rule, check out our video
on the topic. We run through how to check your 5/24 status on Credit Karma. Number
2: Re-earning a bonus. If you've had a Chase Sapphire card in the past but
cancelled it, you can't get a bonus if it's been less than 24 months since you
received your bonus. Keep in mind that the bonus date and the approval date are
different. It's the bonus date that actually counts. Also, it doesn't matter
if it was a different Sapphire card. To qualify for the signup bonus on a
Sapphire card, you cannot have earned an opening bonus on any version of the Sapphire
card within the past 24 months. For example, if you applied for the Chase
Sapphire Preferred in January 2017 and received your bonus on March 15 2017,
then you wouldn't be able to get a bonus on any Chase Sapphire card, even if it's
a Reserve card, until March 16, 2019. Number 3: You can only have one
Sapphire card account open at a time. This means that you can have both the
Sapphire Preferred and Reserve card at the same time. I would also be careful
with your timing if you're planning to cancel a card and reapply. Sometimes it
can take a while for a card to close out and cancel on the issuer side, so if
you're planning to be apply for another Sapphire card, I would wait a month or
more just to be safe. That way you know that the account is fully cleared out
and closed on the issuer's side before they consider your application. Number 4:
Your downgrade options are limited. For the Chase Sapphire cards, there are
basically three options: The Freedom, Freedom Unlimited, and Sapphire card. The
Sapphire card is not publicly available and is unavailable to new customers.
It's apparently still available as a product change option for current
Sapphire Preferred and Reserve card members. It's basically a no annual fee
version but with a lot less benefits. In fact, I think it's a bad deal for most
people since it would count against you because of the previous one Sapphire
card rule. For most people, the Freedom and Freedom Unlimited cards are the best
option for a downgrade. Both have no annual fee and can earn Ultimate Rewards
points that can be pooled with a premium Chase card. Lastly, you can't downgrade to
one of Chase's co-branded cards like the Hyatt
or United card. The Ink Business cards are also not valid options for a
downgrade from a Sapphire card. Number 5: Ask for an annual fee waiver. If
you've decided that you want to downgrade or cancel, it doesn't hurt to
ask whether Chase would consider waiving the annual fee. It used to be common for
the issuers to waive annual fees or provide retention bonuses. Though I don't
think they're as common nowadays, especially when it comes to Chase. But it
doesn't hurt to ask and see if they would honor it. Of course, this only
applies if you like your current Sapphire card but have issues with the
annual fee. If you're trying to downgrade so you can apply for another Chase
Sapphire card to get the bonus, then the waiver on the annual fee is not going to
be useful to you. In summary, downgrading your current Chase Sapphire Preferred or
Reserve to a Freedom or Freedom Unlimited so you can apply for another
Chase Sapphire card is a great way to earn another large opening bonus. But
there are a ton of factors to consider. It's not a good option if you've picked
up your current Chase Sapphire Preferred or Reserve card less than two years ago,
and also not an option if you already have a Freedom and Freedom Unlimited
card. I personally did something similar in 2016 when I got my Sapphire Reserve
card. Back then, you could have multiple Sapphire cards. So at the time, I had both
a Sapphire Reserve and Sapphire Preferred card. Since I didn't need both,
I converted the Sapphire Preferred to a Freedom Unlimited card rather than
closing the account. Of course, this was 2016 and things have changed a lot since
then. You definitely wouldn't be able to do the same nowadays with all the new
rules and restrictions from Chase. Have any of you downgraded your Chase cards
or even reapplied for a Sapphire card in order to get the opening bonus? Please
share your experience below. Also, I know this is a complicated topic, so let us
know if you have any questions. If you're interested in getting a new credit card
and want to help support the channel, visit our credit card offers page on our
website. It's an easy way to help us out and get that awesome new credit card. If
you enjoyed this video or found it useful, please give us a thumbs up and
consider sharing our video with others who might benefit from our content. Until
next time, travel safe and travel smart.