Considering whether to keep your Chase Sapphire Reserve® card, especially with its premium annual fee and potential changes to benefits? While the thought of canceling might cross your mind, especially as the fee comes due, outright cancellation is rarely the best strategy.
Often, the smarter move is to explore your options, particularly a “product change” or downgrade, before closing the account entirely. This approach helps protect your credit score, preserve future opportunities, and keep your valuable points intact.
Why Canceling Your Chase Sapphire Reserve Could Hurt
Closing a credit card, particularly a high-tier one like the Sapphire Reserve, can have several negative consequences:
Impact on Credit Score: Canceling an older account can negatively affect your credit score by reducing your average account age and lowering your total available credit. A lower total credit limit can increase your credit utilization ratio (the amount of credit you’re using compared to your total available credit), which is a key factor in credit scoring.
Loss of Valuable Points: Accumulated Chase Ultimate Rewards points are typically forfeited if you close the account holding them. While you might have a short grace period, it’s not guaranteed. These points are highly valuable, especially when transferred to airline and hotel partners, and losing them is a significant drawback.
Forfeiting Remaining Benefits: Any unused benefits, such as the annual $300 travel credit or the Global Entry/TSA PreCheck credit, are immediately lost upon cancellation.
Potential Application Delays: Canceling a card outright can sometimes delay your eligibility to apply for a new Chase card for up to 30 days.
The Strategic Alternative: Downgrading Your Card
Instead of canceling, consider downgrading your Chase Sapphire Reserve to a different Chase personal card with a lower or no annual fee. This process, also known as a product change, allows you to keep the same account number and credit history, avoiding the pitfalls of cancellation.
Benefits of Downgrading:
Preserves Credit Score: Downgrading keeps the account open, maintaining its age and contributing to your overall available credit. This helps keep your credit utilization low and supports a healthy credit score.
Protects Your 5/24 Status: A product change does not count as opening a new credit card account. This is crucial for navigating Chase’s unofficial 5/24 rule, which generally prevents approval for new Chase cards if you’ve opened five or more cards from any bank in the past 24 months. If you canceled the Reserve and then applied for a new card, that application would count towards your 5/24 limit.
Retain Your Ultimate Rewards Points: Downgrading allows you to keep your existing Ultimate Rewards points balance. While the redemption value or transferability might change depending on the card you downgrade to, you won’t lose them.
Maintain a Relationship with Chase: Staying within the Chase ecosystem keeps your options open for future card applications and offers.
Eligible Downgrade Options from the Sapphire Reserve
Chase typically allows product changes within the same card family. Common downgrade options from the Chase Sapphire Reserve include:
- Chase Sapphire Preferred® Card: This is a popular choice. It has a much lower $95 annual fee but still offers strong travel rewards, including 2x points on travel and 3x on dining. Crucially, it allows 1:1 transfers to Chase’s valuable airline and hotel partners and offers primary rental car insurance. However, note that you cannot earn the new cardholder welcome bonus on the Sapphire Preferred if you product change to it.
- Chase Freedom Unlimited®: A no-annual-fee option that earns 1.5% cash back (or 1.5x points) on most purchases, plus boosted rates on dining, drugstores, and travel booked through Chase.
- Chase Freedom Flex®: Another no-annual-fee option with 5% cash back (or 5x points) in rotating quarterly bonus categories (on up to $1,500 in spending), plus 3% on dining and drugstores and 5% on travel booked through Chase.
- Chase Slate Edge℠: A no-annual-fee card primarily focused on balance transfers and building credit, offering a 0% intro APR period and potential credit line increases.
Choosing between the Freedom cards and the Sapphire Preferred often comes down to your spending habits and future credit card strategy. Downgrading to a no-fee Freedom card can be particularly strategic if you received the Sapphire Reserve bonus within the last 48 months and eventually hope to earn the welcome bonus on a new Sapphire Preferred card down the line (Chase’s rules require waiting 48 months after earning the bonus on any Sapphire card before being eligible for a bonus on another Sapphire card, and you must not currently hold any Sapphire card).
Timing is Key
Before initiating any product change, make sure you:
Use any remaining annual travel credit: Maximize the benefits you’ve already paid for.
Redeem or transfer your points: While downgrading usually preserves points, it’s wise to have a plan for them, especially if moving to a card that might change their redemption value or transferability. Using them for high-value transfers before any change is often recommended.
The Bottom Line
While the Chase Sapphire Reserve carries a high annual fee that warrants regular review, simply canceling it can be detrimental. By understanding the value of a product change, you can transition to a card that better suits your current needs while protecting your financial health and future opportunities within the world of points and miles. Downgrading allows you to keep your credit history intact, save your valuable points, and potentially position yourself to earn future welcome bonuses down the road, making it the smarter alternative to hitting the cancel button.
