Steps in Receiving a Lower Credit Card Rate

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Want a lower credit card rate? Just ask

Make the call.

A five-minute phone call to your credit card issuer could save you hundreds, even thousands, of dollars in interest charges.

"There's no incentive for them to lower your rate unless you call. The squeaky wheel gets the oil," says Brad Dakake, a consumer advocate with Massachusetts Public Interest Research Group.

Not convinced that a credit card company will give you a lower interest rate just because you call and ask nicely?

Check out the results of a national survey conducted by the U.S. Public Interest Research Group in March 2002. Fifty consumers of all credit backgrounds called credit card issuers and asked for lower rates on their credit cards. More than half, 56 percent, scored lower rates. How low did the rates go?

The 28 consumers who landed lower rates saw the APRs on their cards drop from an average of 16 percent to 10.47 percent.

Slicing interest rates by more than one-third by making a quick phone call is pretty impressive. A handful of consumers did exceptionally well.

One cardholder from Colorado saw his 14.99 percent rate reduced to zero for six months. That's quite a deal.

Another cardholder from New Mexico saw the APR on her credit card drop from 31.12 percent to 14.65 percent. Until she called, she had no idea she'd been paying a penalty interest rate.

"She didn't realize that for six months she was paying this outrageous 31 percent interest rate," says Dakake, the principal author of the rate reduction survey and study.

It can't hurt to ask
Why are card issuers so willing to cut interest rates for so many of their customers? For one thing, competition in the credit card industry is fierce. If you're a good customer, a card company is going to want to hang on to you.

"It costs them a couple hundred bucks to acquire a new customer and it's not so easy anymore," says Howard Strong, author of What Every Credit Card User Needs to Know.

And thanks to Alan Greenspan, issuers can afford to make rate cuts for their customers. The Federal Reserve continues to cut interest rates, making it much cheaper for issuers to borrow the money they lend to customers.

"They can afford to give consumers a break," Dakake says. "And they'll do it to keep your business."

And while it's not quite a matter of ask and ye shall receive a lower credit card rate, it's pretty darn close. All the consumers who participated in the PIRG survey were given the following sample script.

Hi, my name is [Your Name]. I am a good customer, but I have received several offers in the mail from other credit card companies with lower APRs. I want a lower rate on my card, or I will cancel my card and switch companies.

And that's it. Even folks who dread confrontations ought to be able to handle that. You only need to be assertive for a matter of seconds.

"Additionally, a lot of people would ask for a 10-point reduction," Dakake says. "A lot of people aren't going to get that, but I think it's important to shoot high."

Persistence really pays
Strong, who teaches a class for people with credit problems, encourages all of his students to call their credit card issuers and ask for lower rates. Many do just that. How many are successful?

"I would say three out of four easy," Strong says.

He encourages folks who are denied rate reductions to try again another day. You may reach a more cooperative customer service rep. You may be sent to an agent who specializes in keeping customers who are threatening to leave.

Be persistent and make it clear that you'll close your account if your interest rate is not lowered.

"Persistence pays in these matters," Strong says. "If the rep won't do it for you, ask for a supervisor."

Keep your request simple.

"I personally like the line, 'What can you do to help me out?' " Strong says. "Another classic negotiating line is 'Can you do any better?' "

If your card company won't budge, it's time to start looking for a better deal. The credit card page can help you search for card deals from issuers from around the country. This worksheet shows you how to transfer a balance to a lower rate card without a hitch.

"You have to be prepared to move your account if they don't do anything for you," Strong says. "Some of these places are really hard line."

Not everyone who asks is going to get a lower interest rate. But long-time customers may have a better chance than newer customers.

The consumers in the PIRG survey who saw their rates reduced had been with their card companies an average of four years. They were also using only 27 percent of their credit lines.

Newer customers with higher balances may have a tougher time getting their interest rates knocked down. But it's still worth a shot.

"It's well worth a five-minute phone call," Dakake says. "Why would you want to pay even $10 more to your credit card company if you don't have to?"

How to Negotiate a Better Credit Card Deal


By eHow Contributing Writer

That plastic card in your wallet isn't the only thing flexible about your credit--your card's interest rate and annual fee are, too. Credit card offers range all across the board. That's great news for you as a consumer, because with a little effort you can get a better deal.

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  • 1. Step 1

Find out which cards have lower rates than your current card. Call your credit card company and indicate that you are thinking of canceling your account and going with another card with a much lower rate. Ask for a rate that matches the other card.

  • 2. Step 2

Negotiate a reduction in your annual fee. Finance charges are not the only cost of holding a credit card. The annual fee can add up to much more than your monthly finance charges. Call your credit card company and negotiate hard to reduce or even eliminate this fee. Again, threatening to close your account usually gets their attention. Don't bother trying this with cards that are cobranded with airlines or hotels to offer rewards; these cards will never drop their fee.

  • 3. Step 3

Go to a site such as to compare rates, but make sure you pay attention to all the details of the agreement. Note whether there is a grace period and how long it is; how long the introductory rate is in place; what the late fee is; whether the rate applies to new purchases, balance transfers, cash advances or only some transactions; and whether the introductory rate automatically increases if a payment is late.

  • 4. Step 4

Cite your history as a customer. If you've been with a card company for a while, play up your loyalty. Learn your FICO score ( to know whether your credit rating is top-notch or not. (See How to Shop for a Mortgage for more information.) If it is in great shape, you'll likely be able to secure a very low rate elsewhere-- and you should tell your current credit card company that.

  • 5. Step 5

Arrange for a balance transfer to your new card from your old card once you line up a better rate elsewhere. Read the fine print about balance transfer interest rates: They can often be higher than the interest on purchases.

  • 6. Step 6

Factor in the perks. Many cards that give added benefits, like airline miles or cash rebates, often charge annual fees and have higher interest rates. If you use your card substantially, these benefits add up and may be more valuable than the amount of the fees. Do the math to see if you come out ahead on benefits.

  • 7. Step 7

If you pay off your balance in any one month, forget interest rate and maximize other benefits. Let's face it, if you don't carry a balance, who cares what the rate is? Go for the added benefits like miles, loyalty points, cash rebates or low or no annual fees.

Tips & Warnings

  • If you have a good history with your credit card company, try asking for both a larger credit line and lower interest.
  • If you're looking for rockbottom rates, check out teaser cards that offer zero percent interest for a set period of time. Be aware, though, that the rate may only apply to balance transfers, and it will inevitably spike.
  • Since credit card companies make more money off of customers who don't pay their balances in full, you may actually be in a better negotiating position

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