NerdWallet's Smart Money Podcast
What to Do When the U.S. Gets Downgraded and Your Travel Credit Card Stops Paying Off
29 May 2025
Learn what a U.S. credit downgrade means for your portfolio, plus find out when it might be time to cancel your travel credit card. What does the U.S. credit rating downgrade mean for your investments? Should you cancel your travel credit card if the perks no longer justify the fee? Hosts Sean Pyles and Elizabeth Ayoola discuss the U.S. government’s recent credit downgrade by Moody’s and how it could impact markets, borrowing costs, and long-term economic stability. Joined by NerdWallet news writer Anna Helhoski and investing writer Sam Taube, they break down the downgrade’s broader implications and offer tips on navigating bond yields, safe investment vehicles, and economic uncertainty. Then, Sean and Elizabeth are joined by credit cards Nerd Melissa Lambarena to answer a listener’s question about canceling a high-fee travel credit card. They explore the pros and cons of closing accounts, how to audit whether a card’s perks are still worth the fee, and alternatives like downgrading to a lower-fee card. They also cover how to track credit card value, minimize credit score impact when making changes, and optimize benefits like lounge access, rental car perks, and more. Card benefits, terms and fees can change. For the most up-to-date information about cards mentioned in this episode, read our reviews: United Quest card review: https://www.nerdwallet.com/reviews/credit-cards/united-quest United Explorer card review: https://www.nerdwallet.com/reviews/credit-cards/united-explorer NerdWallet offers a Treasury account through a partnership with Atomic: https://www.nerdwallet.com/lp/treasury-account What is a credit card product change and how does it work? Instead of opening a new account, you could ask to change to a different card. Here's when and how to do so: https://www.nerdwallet.com/article/credit-cards/credit-card-product-change In their conversation, the Nerds discuss: US credit rating downgrade, Moody’s downgrade 2024, what happens if US defaults, effects of US credit downgrade on investments, treasury bond yields 2024, how to evaluate credit card perks, downgrade travel credit card, how to keep a high credit score without using credit cards, short-term Treasury bills, Treasury accounts vs savings accounts, investing during economic uncertainty, Moody’s credit rating explained, credit rating agencies, U.S. debt ceiling 2024, credit card points strategy, tracking credit card rewards, how to downgrade a credit card, budgeting for credit card annual fees, short-term treasuries vs CDs, best way to manage multiple credit cards, using perks to offset credit card fees, and investing during economic downturns. To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [email protected]. Like what you hear? Please leave us a review and tell a friend. Learn more about your ad choices. Visit megaphone.fm/adchoices
Full Episode
How's your credit, Sean? I know we talk about it all the time, but are you in the 850 club?
850 is not important, as we also say. But yeah, I'm in the neighborhood. What about you?
I like what you just did there, Sean, about I'm in the neighborhood. You didn't give us an exact score. Well, I know. I checked my Experian this week, and I'm 10 points away from 800. So you do the math. Okay. Today, we're going to talk about someone else's good faith and credit. Okay.
Good old Uncle Sam. He's been downgraded. We'll hear what that means. Welcome to NerdWallet's Smart Money Podcast, where you send us your money questions and we answer them with the help of our genius nerds. I'm Sean Piles.
And I'm Elizabeth Ayola. This episode, we are looking at some reasons why you might want to switch up your credit cards. But first, our weekly money news roundup, where we break down the latest in the world of finance to help you be smarter with your money. And speaking of credit, the United States just had its credit downgraded by the ratings agency Moody's.
Our news colleague, Anna Helhosky, is here to explain more.
Hey, Anna. Hey, Sean and Elizabeth. Yeah, so Moody's, one of the big credit rating agencies, downgraded the U.S. rating from AAA to AA1. Now, on face value, that sounds pretty far removed from our everyday lives, right? But there are implications for the broader economy that can have ripple effects on our financial lives, especially when it comes to investing.
Before we get to that, can you talk more about the rating system and why it matters? Sure. So the U.S. credit rating evaluates the government's ability to pay its debts. It's set by three major credit rating agencies, Fitch Ratings, S&P Global Ratings, and Moody's Investors Services. Now, Moody's was the last holdout of the three top credit rating agencies to downgrade the U.S. rating.
In 2011, at the tail end of the Great Recession, S&P Global Ratings lowered the U.S. 's rating to AA plus from AAA. And in 2023, Fitch issued the same downgrade to AA plus. A lower credit rating from Moody's signals that the U.S. government is at bigger risk of default.
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