What is the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act)?

One of the most frequently asked questions we receive is, "I just received my Chase Sapphire Preferred, can I upgrade it to the Chase Sapphire Reserve before the 12-month mark?"

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It's understandable that people sign up for the Chase Sapphire Preferred, and then realize a few months later they should've applied for the Chase Sapphire Reserve instead because of the travel benefits. Unfortunately, you can't upgrade the Chase Sapphire Preferred to the Chase Sapphire Reserve within the first year of receiving the card.

The main reason why you can't product change your card before the first 12 months is due to the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act).

What is the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act)?

The CARD Act is a federal law that protects consumers from certain credit card charges like interest rates, double cycling, limits on late fees, and more transparent disclosures on credit card statements.

Section 172 of the CARD Act pertains to additional limits on interest rate increases:

‘‘SEC. 172. ADDITIONAL LIMITS ON INTEREST RATE INCREASES. ‘‘(a) LIMITATION ON INCREASES WITHIN FIRST YEAR.—Except in the case of an increase described in paragraph (1), (2), (3), or (4) of section 171(b), no increase in any annual percentage rate, fee, or finance charge on any credit card account under an open end consumer credit plan shall be effective before the end of the 1-year period beginning on the date on which the account is opened."

Read the full CARD Act here: https://www.ftc.gov/sites/default/files/documents/statutes/credit-card-accountability-responsibility-and-disclosure-act-2009-credit-card-act/credit-card-pub-l-111-24_0.pdf

When you read through the terms of the Credit CARD Act, it seems like the fines and protections only applies to interest rates, but some credit issuers take it one step further and apply it to the annual fees as well.

How does the CARD Act affect you?

Even though primary goal of the CARD Act is to protect consumers, it does put some of our subscribers in a weird spot because they can't upgrade their card to a more premium product until 12 months later. 

The Chase Sapphire Reserve and the Chase Sapphire Preferred most likely have different interest rates, so you have to wait 12 months before upgrading. One important note is that if you choose to upgrade the card, you will not receive a signup bonus for the Chase Sapphire Reserve.

Another frequently asked question we get is if you can collect a signup bonus and immediately cancel a card. I strongly advise against this because you could end up on a credit issuer's blacklist. Keep the card for at least 12 months before canceling or product changing.