Do you pay more in credit card interest than it seems fair? Ask the credit card company to give you a lower interest rate and you will probably get it. Pick up the phone and find out how far they are willing to go to run your business.
Before you start, you need to make sure that you have your last credit card statement and copies of credit card offers that you have received.
1. Contact customer service
Contact the issuing bank’s customer service department. You will find the number on the back of your credit card and on your statement. Identify yourself and tell the account manager that you want a lower interest rate.
If you always pay on time, have a high credit rating or are a long-time cardholder, now is the time to mention these things. Also mention all low interest credit card offers that you have received by mail from competing banks.
2. Ask the right questions
If the representative agrees to lower your interest rate, thank him or her. Then find out all the details about your new rate.
Is it a short-term promotional offer or your new APR? Will the new rate come into effect immediately? If the representative rejects your request, stress that you will be forced to take your business to another bank.
3. Do your homework before you negotiate.
Although simple asking can work, you understand that you will probably need to participate in some negotiations to lower your rate. Fortunately, you have the upper hand. “Credit card companies know that losing customers is very expensive for them, so using that knowledge gives you some room for negotiation,” says Conor Richardson, accountant and author of Millennial Money Makeover.
Ben Woolsey, marketing director of Bulldog Media Group, which owns the personal finance site CreditSoup, says before you play hardball, you have the numbers on your side. According to Woolsey, you should know your existing balances and how much interest you paid last year so you can explain why your issuer should offer better than your current interest rate. You should also research what low-yield cards there are on the market and refer to other offers you have received online or by mail.
4. Stay up to date
Once you have managed to get a lower interest rate from your card issuer, or have decided to switch to another issuer with a lower interest rate, it is a good idea to take a look back from time to time to see what the latest interest rates are and whether you might be able to further improve your interest rate.
You can negotiate your credit card rate more than once, so don’t hesitate to ask for a better offer when you see your interest rate rising again.
5. Shopping for lower interest rates
There’s a whole world of plastic out there. Why should you restrict yourself? Do your research and compare the different credit card options. With a little digging, you should be able to find one with a lower rate.
You can use this information to your advantage by bringing it to the attention of your current card issuer. The company will more than likely be willing to pay a competitive price to get your business.
6. Improve your balance (if possible).
Anything you can do to improve your balance before applying for a higher limit could be helpful. For example, if you pay part of your credit card balance, you can reduce the balance to limit ratio in your credit reports. A lower ratio is good for your credit rating. Even if you can only afford to lower this ratio by a few points, it might be enough to increase your credit rating, which will give you more leverage.
7. Always pay your debts
By paying on time and in full with your credit cards, you are in a better position to negotiate lower interest rates. Timely payment also ensures that the interest charges are not even on your account, and is one of the criteria taken into account in your credit score, so it is the gift you continue to give.
8. Look up your payment history.
Check your credit card’s payment history before calling the issuer. Have you always made all your payments on time? If so, make sure you present your impeccable point of sale history when you call your card issuer and negotiate a lower interest rate. If you are constantly missing payments, your issuer may be more interested in closing your account than in lowering your interest rate.
9. Open an account with a new credit card company.
Credit cards are notorious for their high interest rates. Therefore, lenders use low interest rates to attract consumers to get a card from them. So if you want low interest rates, you can look for a new card and transfer the existing balance from your old account to the new one. Of course, this has to be done smartly. You only need to open one account because too many applications will reduce your credit score. And not only that, you also need to read the small print in your card. Usually, the low interest rate is just an introductory offer. Usually it changes after a few months (or increases, to be exact). You need to be ready for this, so you can pay off your balance before it happens.
10. Negotiate with the creditor.
The last option to help you get a lower credit card interest rate is to call your creditor to negotiate yourself. Some people may feel intimidated to do this, but believe it or not, there are consumers who have done this and were rewarded with lower interest rates. All you have to do is call your creditor, tell them that you are going through a difficult financial situation and ask for a lower rate to prevent you from defaulting on your payments. Usually, sick people who receive expensive medical treatment get a lower rate of interest – even if only for a short period of time. You can also make this request if you are a good borrower – meaning that you pay your contributions on time. Some consumers are sneaky enough to bluff their way through. They tell the lender that another company has offered them a new credit card with a lower interest rate. Instead of immediately going for the new card, they called their current lender to see if they could offer the same or a better credit card rate. You should be careful with this if this is what you intend to do. And make sure you are ready to transfer your balance in case the creditor calls your bluff.
What to do with old cards
Keep in mind that due to current credit scoring practices, it is usually best to keep old accounts open even if you are not using them. So wipe the balance off your current card and put it in a drawer where you won’t be tempted to use it.
If you are striving for a lower rate, remember that your track record is important. Don’t jump between card companies too often, build up an excellent credit score and pay your debts.
You’ll reap the rewards soon enough.