If you're giving serious thought to upgrading or downgrading your credit card, it will be helpful if you consider the effects both these actions can have on your credit score.
Various types of credit cards have different implications for credit scores
For example, according to the Huffington Post, you have the option of switching from a basic credit card to a premium credit card. However, the source stipulated that it makes sense for an individual to decide to obtain a credit card that matches spending habits and the lifestyle of the credit card user.
You will not do very much damage to your credit score if you do decide to upgrade to a premium card, the source noted. Likewise, it's even possible for you to slightly raise your credit score if you opt for a upgrade. The rise in your credit score can come from a few factors – the source listed the way in which the bank reports the new card as possibly having an effect on your credit. Furthermore, you must already have a fairly high credit rate to acquire a premium card. A higher credit rating means that if you are the holder of a premium card you will be given more financial license. The source even noted that some top-tier credit cards don't limit a cardholder in the amount of money they can spend.
So, if you're feeling hemmed in by the restrictions placed on you by a more basic card, you could consider upgrading. However, it's worth remembering that should you take on debt for purchases made with the premium card, you run the risk of lowering your credit score.
Benefits of downgrading to a more basic card
However, you instead might be interested in the reverse of the previous scenario – namely, by downgrading to a more basic type of credit card. The reasons for doing this abound, while one prominent example the source gives is the fact that many individuals don't really need the additional services a premium card has. Furthermore, the source noted that downgrading can result in savings, meaning you could possibly end up having more money in the bank if you are thinking about downgrading. These savings would generated from not having to pay for premium services, according to the source. If you currently have a premium card and are finding that you're not really using or interested in the numerous services and benefits the card provides, it might be time to change to a more basic card. Though premium credit cards come with many perks, it's definitely pertinent to keep in mind the advice the source gave regarding having a credit card that reflects your lifestyle and spending habits. It doesn't make much sense to be investing in a premium card if you typically enjoy using a credit card for small and infrequent purchases – not only will this make more sense, it's also liable to translate to a happier life as well.
Additional information about credit cards and credit scores
According to My Bank Tracker.com, keeping your credit score robust isn't always due to the amount you have saved in the bank. For example, many dominant credit reporting agencies gauge credit scores by looking at positive activity regarding credit. This means that your credit activity should be posted on a fairly regular basis to maintain a good credit score. So, if you continually pay off the purchases you have paid with your credit card and are on time with balancing your checkbook, it's likely that your credit score will be positive, irrespective of the amount of money you have in the bank.