Does It Make Sense To Downgrade To No Annual Fee Chase Cards?

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Three of the best Chase credit cards for maximizing everyday spend are no annual fee cards (which is rare, because typically no annual fee cards don’t offer a competitive return on spend). Specifically, I’m talking about the:

  • Chase Freedom® Card, which offers 5x points in rotating quarterly categories, on up to $1,500 of spend per quarter
  • Chase Freedom® Unlimited, which offers 1.5x points on all purchases
  • Ink Business Cash℠ Credit Card, which offers 5x points on the first $25,000 spent annually at office supply stores, and on cellular phone, landline, internet, and cable TV services, plus 2x points on the first $25,000 spent annually at gas stations and restaurants

These are all technically cash back cards, though in conjunction with a card accruing Ultimate Rewards points, like the Chase Sapphire Preferred® Card or Ink Business Preferred℠ Credit Card, those points can be converted into Ultimate Rewards points at a 1:1 ratio.

So, what’s the best way to acquire these no annual fee cards?

Remember Chase’s “5/24” rule

Keep in mind that Chase has what’s commonly referred to as the “5/24” rule, where you typically won’t be approved for a new Chase card if you’ve opened more than five accounts in the past 24 months. So that’s the major restriction when it comes to applying for Chase cards, and it’s why I recommend applying for Chase cards ahead of other cards, even if other cards have bigger bonuses.

It can make sense to apply directly for Chase no annual fee cards

So the obvious option is to just apply directly for the card you want. Personally I’d first pick up a card like the Chase Sapphire Preferred® CardInk Business Preferred℠ Credit Card, or Chase Sapphire Reserve℠ Card, given the big bonuses and great return on spend. Furthermore, in order to unlock the full potential of the no annual fee cards, you also need a card that earns Ultimate Rewards points.

While the above no annual fee cards offer big return on spend, they don’t offer massive sign-up bonuses:

The sign-up bonuses on the Freedom and Freedom Unlimited are pretty solid for no annual fee cards, and the bonus on the Ink Business Cash is very good for a no annual fee card, in my opinion.

So the most obvious choice is to just apply for the card you want directly.

Can you downgrade Chase cards to a no annual fee option?

There’s one other potential option for acquiring some of these cards indirectly:

Do keep in mind that even when a product change is allowed, it’s typically not permitted within the first year of card membership. So if you get the Sapphire Preferred now, you wouldn’t be able to downgrade it to the Freedom or Freedom Unlimited for at least a year.

Still, this is something many may find worthwhile. For example, I used to have the Sapphire Preferred, and then when I signed up for the Sapphire Reserve, I decided to downgrade the Preferred to the Freedom Unlimited.

Bottom line

I know it’s tempting to apply for the credit cards with the biggest bonuses first, but it also makes sense to view maximizing miles & points as a long term mission. Sure, the sign-up bonus on a card like the Chase Freedom® Card or Chase Freedom® Unlimited may not be as big as the bonus on some other cards, but long term you still may earn the most points by acquiring one of those.

If you value the benefits of the cards but don’t want to apply for them directly, at least have a plan for how you can downgrade other products to them.

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Comments

  1. Ben–

    In your description of the 5/24 rules, shouldn’t it say “five or more” rather than “more than five”?

  2. @jmd001 The actual rule is 5/24 will result in a denial for the 6th nearly always. 4/24 may or may not result in a denial for the 5th application, depending on how Chase feels about your credit history, and also perhaps the phase of the moon when you apply. 😉

  3. I downgraded my several-years old Ink Plus card to the Ink Cash recently with no problems. I didn’t need the extra bonus spend limit for office supply now that easy gift card MSing is gone.

  4. Note that if you got the CSP, then got a reserve soon after, and want to downgrade your CSP before a year of membership is up, there’s a way to do it. Just change it to a regular sapphire (no fee), and once that change is approved, you can request to change the new no-fee sapphire to a freedom unlimited. I did this last week (~7 months with the CSP). They do still send you a sapphire card, but I just cut mine up once I got my freedom unlimited.

  5. @Lucky didn’t you also downgrade your Ink Plus to Ink Cash? What was your rational? Is the only difference the 50% lower threshold of $25k vs. $50k?

  6. Got the Sapphire Reserve
    Got the Ink Business Preferred
    Had the Sapphire Preferred
    Have the Mileage Plus Explorer
    Have the Freedom
    Downgraded the Sapphire Preferred to the Freedom Unlimited
    It all works together like a charm, and the rewards are in stellar distance up there, compared to anyone else (at least if you’re with United Air Lines).
    Got the Amex Platinum Business and the Amex Gold Business too, but will return them after reaping the bonus, and keep all the Chase Cards.

  7. @Lucky —> While it makes sense, given the 5/24 rule, for you to “recommend applying for Chase cards ahead of other cards, even if other cards have bigger bonuses,” that doesn’t help those of us (I *cannot* be the only one in this position) who had already received 5 cards in a 24 month period PRIOR to the introduction of the CSR. And since I am still blocked from applying for it — and, again, I “cannot* be alone in this — I have lost 50% of the sign-up bonus, despite my good credit. Chase is on my $#|+ list for this . . . and yet, I still want the CSR card . . . . .

    Glutton for punishment!

  8. @Jason–it also works the other way, so if you have a no fee Chase card you might be able to upgrade it ot the Reserve. Obviously you lose the sign up bonus but might make sense if you spend a lot on travel and dining.

  9. Upgrading is not something usually done — rather, as described above, you apply for a “super” card, then take your “middle” card and downgrade it to a no-fee card. I’ve never heard of any company say, oh sure, we’ll change your Green Amex (e.g.) for a Centurion card. Applying for the Centurion, or in the case at hand the CSR requires a full-on application. Once the CSR is in hand, downgrading the CSP to a Freedom card typically takes only a phone call — *not* a new application.

  10. I just PCd my 1 month old Ink Pref to an Ink Cash. AF was also refunded for the Ink Pref so information above is not quite correct.

  11. I’m actually looking at downgrading my Sapphire Preferred to either the Freedom or Unlimited at renewal since I now have the Reserve card.

    @Ben between the Freedom or Unlimited which do you think is a better value proposition?

  12. @Jason, I know people who have upgraded their cards. Might be worth a call to Chase if you are seriously interested in the Reserve and have other personal UR earning cards.

  13. I’ve never understood the love some people in the travel blogging world have for “downgrading” as a strategy. Those cards have sign up bonuses, and you don’t get the bonus when you downgrade. I’ve never done it.

  14. This is where I think a lot of people are going to screw themselves: IF you were lucky enough to get the CSR (+1 @Jason), but you don’t want or intend to keepay paying the annual fee, what happens if you’ve downgraded your CSP? Can you turn around and downgrade the CSR for the CSP, no questions asked? If so, downgrade ahead, if not . . . Point is, I’d hate to find myself on the bad side of 5/24 with no useful Sapphire card.

  15. @Lucky, you keep misinforming your readers when you say that they won’t be approved if they have more than five cards (which is 6). As stated by another reader, you won’t be approved if you have FIVE OR MORE credit cards. Big difference.

  16. @Joseph N. —> It’s never been a strategy I use, but it CAN have its advantages. The DOWNside to downgrading is that one misses getting the sign-up bonus; the UPside is that it doesn’t “ding” your credit history. That is, part of your credit score is made up of your history — how long you have had an account with X lender/credit card company. By downgrading (as I understand it), your account keeps the original opening date, and so the length of your credit history with that lender is preserved (instead of having a new account from Day One). Depending upon one’s credit score/history, that can have a significant benefit/impact.

    /\/\/\/\/\

    @Gaurav —> While I certainly believe you, it’s not something I would be interested in doing. While I confess to still wanting a CSR, I’m already irritated enough at Chase that I’ve seen “my” potential sign-up bonus cut from 100,000 points to 50,000. Why would I want to give up on the other 50k? Besides — although Citi can use some improvement in their Customer Service at their Call Center(s) — I remain quite happy with my Citi Prestige card and the benefits I derive from it. That certainly lessens the “need” for a Chase Sapphire Reserve card, and my “want” for it can languish for at least the short-term. I doubt the 100,000 UR sign-up bonus will ever come back, but I’m willing to wait until I fall below the 5/24 rule and then see if that card is still worth applying for . . .

  17. @Jaso, that’s a perfectly reasonable course of action. For some people though the normal spend benefits of the product are appealing enough that they are willing to forego the sign up bonus, especially if they will not be eligible under 5/24 in the future due to their application patterns. For those people, I was simply pointing out that the opportunity exists.

  18. Simple question: Does a downgrade of a Chase card count toward 5/24? How about cards of other issuers, like Citi, Barclay, Wells Fargo, etc.?

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