Downgrading my Chase Sapphire Preferred

I have talked recently about the major shifts in my credit card portfolio. More specifically, I added the Chase Freedom Unlimited and the AMEX Everyday Preferred card — what I’d say are some pretty awesome enhancements to my wallet. And to quickly review, those cards simply get me:

  • 1.5 Ultimate Reward points per dollar spent on all purchases. In other words, where I was previously earning 1 point per dollar with my Chase Sapphire Reserve, the Chase Freedom Unlimited gets me .5 more points per dollar.
  • 3 Membership Reward points per dollar spent at grocery stores, up to $6,000 per dollar year — with the potential of a 50% bonus after 30 purchases a month.
  • 2 Membership Reward points per dollar spent at gas stations — with the same 50% bonus after 30 purchases a month.
  • And maybe most importantly, access to Membership Rewards benefits and their many travel transfer partners. I expect more to come in the future, but this gets me a foot in the door.

But what I really wanted to talk about in this post was how I went about adding the Chase Freedom Unlimited card.

What is a product change?

Before I get into my recent experiences with Chase, I want to first quickly go over what exactly a product change is — because I think it is easily confused by many.

In the most simple sense, a product change is changing one of your credit cards (or product) to a different credit card. Of course, from the same bank. In other words, you can’t swap a Chase card for an American Express card (completely understand that may sound obvious, but had to clarify).

But beyond that, there are a ton of restrictions that the credit card issuers have put on these product changes. As mentioned before, a product change is as simple as it sounds, but there are some caveats that make it unique to all the similar card “switching” strategies.

To the extent of what the card issuers have provided, this is what we know about product changes:

  • Each card issuer has certain “streams” of cards that allow for product changes, which puts a lot of restrictions on their co-branded families. For example, you can’t product change a Chase Southwest Premier Visa to a Chase Freedom card to avoid annual fees.
  • A product change is not a downgrade — more importantly for the credit cards and the banks. As I’ve learned, banks do not like telling you that this is a downgrade, which I can only assume is them trying to keep their branding up. And I can’t really disagree — just because you are going down in annual fees, doesn’t mean you are downgrading the value in your wallet.
  • A product change essentially shifts benefits, but keeps a lot of information the same. In my experience, the card number remained the same, and I was physically given a new card, but the major changes are the benefits, perks, and fees. But as I’ll touch on later, the system is definitely slower in catching up.

So, without further ado, my experiences with a product change.

My experience with said product change

As I’ve talked about a decent amount lately, I was anxiously awaiting for my Chase Sapphire Preferred to hit the 1 year mark so that I could make my switch and not take on the annual fee.

The Chase Sapphire Preferred is an awesome card, and one of the main reasons for the hype is because it essentially gives you a 1-year trial period. You can get the 50,000 point sign-up bonus, enjoy increased spending bonuses on dining and travel, and maybe most importantly not pay any annual fee.

So,while I would have probably switched right after my sign-up bonus hit, you must hold the card for at least a year before you can downgrade. I have to imagine Chase makes some money in people forgetting exactly when their annual fee hits, and ends up tying them in. Which highlights the importance of keeping up to date with your calendar — or more specifically your credit history.

Checking my exact 1-year mark, then calling

In the event that you don’t have some kind of sheet, tracking all of your credit cards with the dates of approval, there is an easy way to check this date — and I’ve talked about it before.

Credit Karma offers a really comprehensive insight into not only your credit score but also your credit card history. So in this case, I was easily able to refer to “Accounts” dashboard on Credit Karma and determine the exact date when I was approved for the Chase Sapphire Preferred.

Since I’ve already switched the cards, this is not a snapshot of my CSP card in Credit Karma, but this is the same view. You’ll notice in the top right that not only is there a date of when the card was “Opened” but they also do the math for you!

So when I checked for my CSP, the exact date of approval was Aug. 26, 2017. And it’s important to note that this is the date of approval, not the date you receive the card — so while I was approved on Aug. 26, I probably didn’t see the card until early September.

Which brings me to the current situation. On Aug. 28 I called Chase to make the product change. I was actually told that it would have to be a day after the 1-year mark, which is all just how it updates in the system, but I waited two days just to be sure.

The actual process is so easy

And that is really all the work that has to be done. I checked when I could make the switch, as I didn’t want to waste time on the phone, and made the call. Without providing you the exact transcript of the call, I pretty much gave the agent just a few bits of information and he was able to handle the rest.

The one thing of note was that I asked for a “downgrade” to the Chase Freedom Unlimited, but he was quick to correct me that this was not a downgrade. He spent some time making the updates, noted that this was probably a good idea since I already had the Chase Sapphire Reserve (no longer possible to hold both Sapphire products), then read through my new benefits.

I can’t stress enough how little I said on this call. I believe I had to validate my identity, I told him I wanted to product change (after his correction), and the rest was really taken care.

One other thing I wanted to note on the call was that the agent specifically stated that you won’t be charged an annual fee. As he explained, it usually takes a few days to process in their system and since we don’t see it yet you shouldn’t have to worry about it all.

Unfortunately, that didn’t happen.

The one hiccup that I’m still dealing with

So really, this process was super easy. I have my Chase Freedom Unlimited, I thought everything was updated on my account, but about two weeks ago (so September 8th or 9th) an annual fee charge was added to my now-Chase Freedom Unlimited account. Which, to remind you, does not carry an annual fee.

And at first I wasn’t worried to the point that I felt like I had to call Chase. I figured something in their system needed updating, and it would eventually correct itself. But after a week, and my card payment quickly approaching I decided to give them a call.

This call took a few more breaths on my end.

Me: Hi, I executed a product change on my Chase Sapphire Preferred to the Chase Freedom Unlimited about a week ago. The agent specifically stated that I wouldn’t see the annual fee, but I know see the $95 charge on my account. Are you able to remove this?

Agent: Well sir. I do see your account ending in -XXXX, and as of August 27, the one year and one day mark on the account you were correctly charged an annual fee. Because of the statement period, that fee showed up on Sept. 1 from what I see. 

Me: Uhhhh. I’m confused. When did you want me to change cards? Why was I charged the fee? As I understand, I have a certain “grace” period if I want to change the card to avoid the fees — and you’re basically saying that’s impossible. [paraphrased]

[At this point I understand that I know more than this agent. It is unfortunate, and for the most part I find Chase card services agents to be incredibly competent, but in this scenario that was not the case.]

Agent: Sir, I understand your frustration. Let me get my manager and she will know how to handle this.

Me: Ok.

Agent’s Mgr: Hi sir, [agent] let me know the situation, and I believe there may be a bit of a mix up. There is no fault on your end, and my agent was feeding you the information he saw on our end. It still shows that account expecting an annual fee to be triggered at the 1 year mark — because there is no change in account number, it takes a bit for everything in our system to update. Please forgive us, but you should see this $95 charge refunded in your account within the next 7-10 days. Have a great day.

I paraphrased that a bit again, but she actually gave me a very thorough explanation of the process. In short, it sounds like Chase is trying to make the “transition” as seamless as possible for the customer, which requires a bit more “work” on the back end.

So, as I had originally thought, the system itself will eventually update and that charge will be refunded. As someone who works in the systems industry, I understand some of the delays and issues that can arise when migrating data. There are a lot of moving parts, to say the least.

Unfortunately, I have still yet to see a resolution to this, but I am confident it will correct.

When a product change makes sense?

As I’ve talked about a ton on this blog, having a clearly defined credit card strategy is crucial in securing long-term value. With that being said, this idea of “product changing” can be a very useful tactic. Let’s look at when you should consider a product change:

  • You won’t be approved for a brand new card. Whether it’s because of Chase’s 5/24, or the impact it will have on your credit limit, maybe your situation is not ready for a brand new (approval) card.
  • Similar to that — you should product change if you don’t want an impact to your credit score from a brand new application. Simply shifting to a new card will not show as any kind of inquiry on your credit report. Essentially not showing up at all to the credit bureaus.
  • Avoiding an annual fee. This defines what I have walked through here. I think the best use case for a product change is avoiding an annual fee — in this situation my benefits are really not changing at all, because of my Chase Sapphire Reserve, and I am gaining a really great card.
  • You don’t want to add to your 5/24 count. As this makes no impact to your credit report, this similarly will not add to your 5/24 count. So if you are eyeing some Chase card, but want a different card (to potentially avoid fees) this could be the perfect option.

So, while we look at the reasons as to why you should do a product change, there are the somewhat obvious reasons why a product change would not make sense. (not many though!)

  • Letting go the opportunity for a great sign-up bonus. This is of course still a personal decision, and some of the other factors above may override it, but it is important to reiterate that you will not get the sign-up bonus for a product change. So if there is a special, increased sign-up bonus you don’t want to miss out!
  • You aren’t “ready” for the card that you are changing to. So many of us think of product changes in the example I’ve laid out — going from a premium card to a no-annual fee substitute. But this could also go the other way, and instead product change from a card like the Chase Sapphire Preferred to the Chase Sapphire Reserve — actually increasing the annual fee. This strategy is actually an easier way to get the “better” cards, but you of course don’t get the sign up bonuses. I would always warn those not to just “jump in” though because it’s easier. So always ensure you are ready for the change.

Final Thoughts

So there is a decent amount to digest here, and to be honest I completely understand that many may never find an actual use for product change. I think it is a great use for the situation I’ve talked about here, and maybe more importantly it’s a great opportunity to take advantage of the “trial” with the Chase Sapphire Preferred that I’ve written about before.

If you aren’t necessarily sold on a card you have now, but maybe aren’t ready for a brand new application, a product change might be your perfect option.

Tucker is an avid points and miles enthusiast. Being fully involved in the world of credit cards and frequent flying for only a few years now, he brings a very fresh and unique perspective to the world of travel.

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