Considering the current state of things, some people may think that it would be best for them to just cancel credit cards to avoid paying fees, which may reach hundreds of dollars depending on the card.

While this decision may work well for certain individuals, canceling a card and foregoing all of its rewards and benefits should not be a person’s first thought. Read on to find out why.

Card Downgrade

Wavebreakmedia/Deposit Photos: Don’t hesitate to give your credit card provider a call to aid you in the process

Instead, credit card holders may want to consider simply downgrading their cards under the same provider. The good news is that people can expect credit card issuers to be flexible when they request a downgrade on their credit cards.

However, it’s important to know that there are no fixed rules about this route. So, before contacting their provider, one is recommended to do their due diligence and research for what kind of card they want to have.

Browse through all of the cards offered by the provider and see which ones have no or significantly smaller annual fees.

During the conversation, make sure to explain to them the reason behind the request to downgrade and clear that the old line of credit will be kept open. If a person is lucky, an issuer may even grant a customer the benefit of waiving their annual fee as a retention offer.

Damage Control

REDPIXEL.PL/Shutterstock: The effects of canceling a card altogether may significantly decrease your credit score

Those who do continue to downgrade their credit cards typically do so because of two reasons. One of them is that they know that this would be less damaging to their credit score.

The act of closing a card reduces the age of a person’s credit history and causes their credit utilization to rise, especially if they carry their remaining balances on their remaining cards. Meanwhile, downgrading won’t lead to any of these results.

Remember that the credit utilization accounts for 30% of the credit score while credit history accounts for 15%.

Rewards for Low Fees

Damir Khabirov/Shutterstock: Want to keep getting travel rewards? Just downgrade your card

Another perk of downgrading instead of canceling is that the credit card user gets to keep getting rewards. This time though, they’re paying no annual fees or a lower one if at all.

Meanwhile, there are also people who decide to downgrade to access the benefits that another card under the same credit card provider gives. Of course, qualifying for a lower annual percentage rate (APR) is also another reason.