I talk a big game when it comes to award chart sweet spots, luxurious flights, and redeeming points for excellent value in general. But I realize it’s been some time since I’ve given you good folks some actionable advice on how to earn the points required to do all these wonderful things.
So today we’ll have a look at the technique of “product switching”, which allows you to earn multiple signup bonuses with one financial institution without incurring additional credit checks, and also helps to improve your credit score and keep it in good health.
What Is Product Switching?
Whenever you put in an application for a new credit card, the lender pulls your credit file and assesses your creditworthiness. That’s known as a “hard pull”, and too many of these inquiries can affect your credit score in the short term, hampering your ability to open even more cards and blow through even more bonuses.
On the other hand, with certain financial institutions, if you already hold a credit card product you’re allowed to “switch” to another product without getting another credit check done. After all, the financial institution isn’t issuing you additional credit – you’re simply transferring your existing credit limit to a different credit card product.
Typically, product switching can only be done over the phone, since applying for a card online would constitute a new credit application. Customer service representatives of banks that allow product switches are all familiar with the practice and can quite easily help you get it done.
The exact details and procedures vary from bank to bank, but in general, product switches are useful for two reasons:
They allow you to obtain signup bonuses without incurring a credit hit
They allow you to extend your average age of accounts (AAoA) on your credit file, since you will be switching away from an existing account rather than closing it
Essentially, a product switch replaces one of your existing credit cards with another, but on your credit file it’s as though nothing happened. Your existing tradeline continues to build up history and contribute to the robustness of your overall credit file, and you get to sidestep the (albeit very minor) credit impact of closing an account and opening up a new one, while in some cases earning a hefty signup bonus as well.
Let’s take a look at the major financial institutions that issue points-earning credit cards and their positions on product switches, to help you maximize your gains. Keep in mind that this information is gathered from anecdotal evidence ("data points") as well as my own experiences. If your experiences vary from those detailed here, as always please do share in the comments.
Unfortunately, American Express doesn’t allow product switches – each new card has to be accompanied by a new credit application. Just imagine how lucrative it’d be if you could switch from the Business Gold to the Platinum to the Business Platinum and back, all without incurring any credit hits.
The flipside to this is that although American Express takes a hardline stance on product switches, they remain the only issuer to offer a meaningful referral program. Using the referral bonus of 25,000 Membership Rewards points a pop on the Business Platinum, you can of course make out like a bandit by self-referring your way through the above sequence.
Reader Gwen reminds me that American Express will occasionally tempt its cardmembers with "upgrade" offers, say from the Gold Rewards Card to the Platinum Card. These offers are usually accompanied with small MR points bonuses, although my experiences indicate that the offers pale in comparison to the full signup bonuses you'd receive with a new application.
CIBC allows product switches, but I've heard mixed reports as to whether they award the signup bonuses when you're switching between cards. Some reports indicate that the bonuses can only be awarded on brand-new applications, while others have reported being able to easily switch to a new card and receive the publicly available offer at the same time (including first-year fee waivers!)
In any case, since product switches are always allowed, one surefire way to improve your credit score is to downgrade your oldest CIBC cards to no-fee cards that will help increase the age of your credit file.
Say you've applied for a CIBC Aventura Visa Card for Business and earned the signup bonus on that one. Six months in, downgrade it to something like the CIBC Dividend Visa, and keep it around. You can later try your luck at upgrading the card to another points-earning card and getting a signup bonus there as well.
Another thing I wanted to say about CIBC is that they're by far the most lenient bank when it comes to receiving annual fee waivers just by asking nicely. On multiple occasions when I've called in to cancel a card, I've been offered my next year free just for keeping the account open. Even if you're submitting a brand-new application on a card with an annual fee, it doesn't hurt to try asking if they'll waive the fee for you on the spot!
The issuing bank behind the Alaska Mileage Plan and Best Western Rewards MasterCards, MBNA has a peculiar set of rules when it comes to product switching. It would be truly fantastic if we could freely switch between the above mentioned cards and nab the signup bonus each time, but alas that's not the case.
However, MBNA does allow you to downgrade from a premium credit card, such as the Alaska or BW Rewards cards, to one of their basic no-fee cards. (Upgrading is also theoretically possible but almost certainly won't come with a second welcome bonus.)
So while this isn't the most useful thing in the world, you can downgrade your Alaska cards into no-fee cards if you'd like to keep the account around for the purposes of aging your credit history. Of course, the Best Western card already has no annual fee, so if you have a couple of those, that would accomplish the same goal.
Another thing to note about MBNA is that you can almost always get approved for their cards by "splitting off" existing credit limits to create a new tradeline. They're the only institution I know of who adopt this policy, and that makes them one of the easiest issuers to get approvals from.
RBC allows product switches, and they are known to award the signup bonuses on product switches as well. That's the killer combo!
You can freely switch between some decent cards, such as the RBC Avion Visa Infinite, the RBC British Airways Visa Infinite, and the RBC WestJet Rewards MasterCard, earning the publicly available signup bonus each time. In fact, I was even encouraged by an RBC banking representative to do exactly this.
The problem is that RBC credit cards rarely have first-year fee waivers, so unless you want to pay annual fees for your points, you'll have to get a little creative. The first way to get your annual fee waived is via the well-documented "Visa Infinite competitor promotion". Basically, if you hold an RBC Visa Infinite product and you ring them up and tell them you have another Visa Infinite from a competing bank, chances are they'll be willing to waive your annual fee.
You could also try opening an RBC VIP Banking account, which waives the annual fee on one premium travel credit card. This account costs $30/month, but what you can do is open the bank account, use it to waive your credit card fee, and then close the bank account within 1-2 months. This makes your net outlay in the region of $30-60, rather than $120 or more.
An even more obscure way to ensure a zero out-of-pocket cost for your points is to open the VIP Banking account, use it to waive your annual fee, and then invoke the RBC Right Account Guarantee, which gives you a refund of up to 3 months' banking fees on any bank account, for any reason. You can take advantage of this offer once a year, and in theory this could get you a free signup bonus per year in perpetuity, all for no additional credit hits.
TD is well known for allowing product switches rather generously. In fact, the terms and conditions on their premium travel credit cards, the Aeroplan Visa Infinite and the First Class Travel Visa Infinite, contain the following verbiage:
Basically, as I’ve touched on before, you’re able to earn the signup bonus as long as you haven’t done so within the previous six months. That gives way to an optimal strategy of switching back and forth between the Aeroplan card and the First Class Travel every three to five months, collecting the bonus each time.
Furthermore, the TD All-Inclusive Banking Account comes with a fee waiver on one premium credit card. If you have $5,000 to park in this account (thus waiving the monthly chequing fees), you can successfully flip-flop between the two products without paying any annual fees at all.
This is as close to free as it's gonna get – no annual fees, no credit checks, just (at least) 15,000 Aeroplan points and 20,000 TD points every six months, no questions asked.
If you find this strategy too aggressive, you can also downgrade your Aeroplan or First Class Travel card to a TD Green Visa (which has no annual fee), and then upgrade back to the premium card sometime later once you’re eligible for the bonus again.
Note that unless you have the TD All-Inclusive Banking Account to waive annual fees, typically TD doesn’t allow you to enjoy first-year fee waivers on product switches, even if it’s part of the current public offer. For example, the First Class Travel Visa Infinite (it occurs to me I haven’t written about this card in-depth yet) currently gives you 50,000 TD Points with a first-year fee waiver, but if you try to switch to it, chances are that you won’t be given the fee waiver (there are few isolated incidences of success, so ultimately your mileage my vary).
Once you've delved deep into the world of cycling through credit card signup bonuses, you find all sorts of ways to maximize your earnings while minimizing your costs (in the form of both annual fees and credit inquiries).
Product switching is a key tool in the arsenal of anyone who's looking to travel on points, particularly if you're serious about keeping your credit file in tip-top shape while doing so. In general, you'll have the most success with CIBC, RBC, and TD, so pick up the phone and set those switcheroos in motion!