Five Reasons to ‘Upgrade’ a Credit Card (and When to Apply for a New One)

Picking your credit cards carefully can help you earn rewards—from points and miles to cash back—and net you useful benefits (everything from DoorDash credits to airport lounge access) in exchange for your spending.

One way to take advantage of more of these sorts of perks is to upgrade an existing card to one with more bonuses or better rewards rates (and often, yes, higher annual fees). An upgrade simply involves calling your card issuer and asking to switch your account to a different card. Depending on the issuer, you may be limited to upgrades within a card family, such as going from the Chase Sapphire Preferred to the Chase Sapphire Reserve cards.

In some cases, though, you’re better off sticking with the cards you have and adding a new card to the lineup instead. Here’s what to consider as you weigh your options.

When you should upgrade your credit card instead of opening a new one

You have a specific use for the benefits or rewards rates

Premium cards with premium benefits may be well worth an increase in your annual fee, but only if you actually take advantage the perks. It doesn’t do much good to have a card that offers free hotel nights and early check-in if you always stay in Airbnbs when you travel, or memberships to services (such as DoorDash, Instacart, or Lyft) that you don’t use regularly. Similarly, upgrading to a card with a different rewards structure makes sense only if you spend enough in the eligible rewards categories.

You have access to an enticing upgrade offer

One of the perks of a new credit card is the intro offer, such as cash back or a significant points bonus, which usually requires a minimum spend within a certain time period after the card is activated. Some card issuers offer similar incentives to existing members when upgrading to a different card in their portfolio. If you can qualify for an upgrade offer, are considering changing cards anyway, and are aware of any increases to your annual fee, this may be a good way to score additional perks and better rewards accrual rates. Upgrade offers aren’t always as lucrative as welcome offers, though, so you could earn a lot more by applying as a new cardholder.

You already have a large collection of credit cards

Upgrading may be the better option if you already have a handful of cards in your wallet that help you get the most out of your spending and you simply want the specific benefits that an upgrade to an existing card would offer. For example, you may not need another travel rewards card if you use the one you have often and the points or miles are useful to you—but an upgrade could bring additional travel-related perks like lounge access or flight credits. Adding a brand new credit card also means you’ll have another bill to keep up with.

You’ve had your current card for at least a year

If you’ve had your current card for less than a year, it may not be wise to upgrade or cancel it, according to The Points Guy, lest your card issuer attempts to claw back the welcome bonus or any perks you’ve used. While this may not happen to you, it’s safer to hang onto credit cards for a year or more before making any changes.

You’re worried about an impact on your credit score

Upgrading your card isn’t likely to have much, if any, effect on your credit score, as there’s no hard pull on your credit and you still get to keep your account history. Applying for a new card may drop your score temporarily with a hard inquiry on your credit, and it will also lower the average age of your accounts. (That said, your credit utilization rate is also likely to go down—as long as you don’t immediately spend a lot more—by adding to your total credit availability. An additional account can also helps build your history of on-time payments.)

When you should get a new credit card instead

You can easily meet the threshold for a worthwhile bonus or intro offer

A major perk of opening a new credit card account is the possibility of earning extra rewards, such as a lump sum of miles, a statement credit, or bonus cash. Welcome offers are usually awarded once you spend a certain amount on your new card within a few months, so a good time to apply may be when you have a big purchase to make or know you’ll be spending enough to hit the threshold.

You want to add a card to your wallet

While getting a new card doesn’t necessarily make sense if you have a lot of credit cards already, it can offer a few important benefits. First, it can fill gaps in your rewards strategy, such as higher accrual rates in specific spending categories, earning miles on a specific airline, or getting you elite hotel status not offered by other cards. More cards often means more rewards, and paying multiple annual fees may be worth it, even if you don’t spend a ton on that card to earn points and miles, if you use the other benefits. A new card also gives you options if one or more of your existing cards are lost or stolen.

You aren’t limited by card issuer restrictions

While product changes (upgrades and downgrades) typically aren’t subject to many restrictions, you may not be approved for a new card or be eligible for an intro offer with certain credit issuers depending on what accounts you already have or have opened recently. Chase’s 5/24 rule limits you from getting a new card if you’ve opened five or more new card accounts in the last 24 months, and you may have to wait even longer to be eligible for a bonus on a new card in the same card family. American Express allows you to access a card-specific welcome offer once in your lifetime, so you can’t close the account and reapply later to earn the bonus again—and upgrades count in your lifetime limit.

You’ll lose accrued rewards if you upgrade

If you are considering upgrading an existing card (or downgrading one, for that matter), be sure to ask what happens with your existing rewards, such as points and miles you’ve accrued, or unused benefits. You don’t want to lose access to your hard-earned points when you cut up your current card. In these cases, keeping the old card as-is while opening a new account may make more sense.