For the United MileagePlus Explorer Card, should you keep or downgrade the card when the annual fee comes due, and what are your options? TravelSort reader Lynn writes “I've read that United MileagePlus Award card is a no fee version. Is it possible to downgrade the United MileagePlus Explorer to a United MileagePlus Awards card? I don't think the annual fee is worthwhile to keep the Explorer for another year, but don't want to lose the credit line either by canceling the card completely. I'm also thinking of getting a Freedom card for everyday use, but seems co-branded card cannot be downgraded to a bank's wholly owned card. Is my understanding correct? What are my best strategy going forward?”
Aim to Keep the Credit Line When Closing a Credit Card
Lynn is right to want to keep the credit line of her United MileagePlus Explorer, as it can be leveraged later to help get approval for a new Chase credit card. Increasing your overall credit line relative to your actual spend also improves your utilization ratio, which accounts for about 30% of your credit score; see Understand How Your Credit Score Works to Maximize Credit Card Rewards.
Retention Bonuses May Make It Worth It to Keep the Card
Before closing or downgrading your card, it's worth seeing if there's a retention bonus to keep the card that either provides a credit against the annual fee or provides miles or points that are worth more than the annual fee. For example, if you're offered 15,000 United miles and value them at about 2 cents per mile, that's worth $300, and well worth keeping the card for in my view. See Current Chase Retention Bonus Offers
Close Your United MileagePlus Explorer and Transfer the Credit Line to Another Chase Card
If you don't get a retention bonus offer that you view as worth paying the $95 annual fee for, then you can first transfer the credit line to another Chase card, before closing the United MileagePlus Explorer. That said, if you have a short credit history you may not want to close a card due to the impact on your average age of accounts, which accounts for about 15% of your credit score.
Downgrade Options for the United MileagePlus Explorer
As Lynn wrote, there is a downgrade option for the United MileagePlus Explorer, in case you want to keep a no fee version of the card and avoid the annual fee: it's the United MileagePlus Awards card, which offers 1 United mile per $2 spent. I wouldn't recommend actually using the card though, since you can earn 5x with certain Ink Bold and Ink Plus spend, or 5.5 with the Freedom and new version of Chase Exclusives for up to $1500 quarterly spend on the 5X categories, and Ultimate Rewards points transfer 1:1 to United miles.
Can you downgrade to a Chase Freedom card from the United MileagePlus Explorer?
No, generally not (although I'd love to hear if any readers have managed to do this). In general Chase will not downgrade you to a Chase no fee card from a co-branded card, such as the United, Hyatt, Priority Club etc. cards. Instead, just go ahead and apply for the Freedom, even with its paltry 10,000 bonus, because the real value of that card is with the 5X categories and the 10% annual dividend (including on bonus category spend) that comprises the new Chase Exclusives and replaces the old 10 + 10 Chase Exclusives program (see Goodbye Old Chase Exclusives Program Even for Grandfathered Members).
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