I have more than my fair share of credit cards, a hazard of the miles and points game. As I mature in this hobby, I have found that some banks don’t let customers switch credit card products but should.
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Why Would You Want to Switch Credit Card Products?
When a customer gets excited about an airline, hotel, or credit card currency (like American Express Membership Rewards, Citi ThankYou Points, Chase Ultimate Rewards) they tend to roll a lot of irrational behavior into those new relationships.
Sometimes relationships with the travel brands on the front of co-brand credit cards sour. Sometimes travel patterns change and an airline or hotel chain no longer makes sense anymore. Sometimes American Airlines makes their loyalty program so worthless that they alienate a lifelong customer. Through no fault of the bank, the financial relationship with their shared airline customer is risked.
Consider a couple that has kids and checks bags, Southwest might make more sense than United (though not if that family is good at math.) If they hold the United Explorer card, they can’t switch to the Southwest cards unless they file a new application.
Banks Don’t Generally Allow This
I recently called Barclays to change my American Airlines Aviator to something more useful as I do not use it but would prefer not to close the credit line. They have a few products that would interest me and may cause me to spend on their cards again while the American card is at the bottom of a shredder.
Barclays does not switch credit lines to other card products from the American Airlines co-brand. They aren’t alone. Chase doesn’t allow a switch to the Freedom card from Southwest for example – it’s all or nothing. Some have stated that restrictions on switching is down to accounting management.
Some banks allow this, Citi is an example, who allow customers to switch from Citi Platinum American Airlines credit card to a free version of their ThankYou points product line.
Banks Should Absolutely Allow Switching
I am currently spending zero dollars with Barclays and have plenty of available credit. I am all risk and no reward for the bank.
Finding new customers is expensive. It’s in their best interest to find a way to retain me, one would think that I would be able to switch products. If I decide to close my account with Barclays and re-open at my next eligibility for a signup bonus, the bank will spend $400-600 to lure me back and that doesn’t include their internal costs of setting up a new line, running my credit, and the advertising to get me back. They could save that investment by allowing me to switch to a product that makes sense for me.
Customers generally don’t like keeping dozens of cards open (though many in our hobby are the exception.) The easier that a company makes it to leave, the more likely I am to return as a customer. The less flexible the company, the less I sense that we are compatible.
Conclusion
It’s better for consumers to apply for new cards and earn a new bonus. That being said, consumers often do things that are not in their own benefit and the banks should make it easier for customers to switch which would also save the bank money and guard against churning.
What do you think? Would it benefit consumers to switch credit card products? Would it benefit the banks to do so? Why don’t you think they allow this?
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I wish I had know that Citi would allow that when I cancelled my AAdvantage card.
When I got the Sapphire Reserve, I called up Chase to see if I could move most of the United Club credit line to the Sapphire, and to my surprise they did it immediately. So I have a huge limit on my Sapphire resulting from the initial credit line offered plus the transfer from the Club card.
When I called Citi to ask the same thing, they said they couldn’t, so I cancelled. I would have rather changed to a different product so I didn’t lose the credit line and credit history.
It really seems odd as you point out, but it must be some accounting (or just red tape) that prevents switches.
I had the same issue with Barclays and my Hawaiian Air WE MC. Gives me way less incentive to do business with them again in the future. FWIW, Chase does let you downgrade to a no annual fee version of their card if they have one available.
Lol. Bank would love to issue a new credit card. But switching is different. You are not making new account for the benefit of the bank. And off course, all the perks of a credit card is a perk, not a purpose. You might want to sue the bank if you really think that they should allow you to switch.
Why don’t you do that? Maybe to prove a point? Haha…
@Kyle (or even Matthew), I’m confused. Aren’t you still able to product change to the same family of products at those banks? For example, let’s say you had the AA Aviator Red and wanted to change to a no annual fee AA card (or to the Aviator Silver). Those are still considered product changes, yet they’re allowed, aren’t they?
Not sure if Barclays has a no annual fee AA card, but if they do, I’m assuming it’s allowed.