How to Negotiate a Better Credit Card Rate
Some people are shy about asking for a lower credit card interest rate; however, summing up the courage to do so can actually help save you money. Remember, it never hurts to ask for a lower interest rate. Regardless–whether your request is approved or not–you have nothing to lose.
This strategy, though, usually only works for those individuals who carry large balances on their credit card, especially for those who are requesting a transfer of their balance to another account or bank. If you rarely use your credit card, then you can expect your request will be denied. If you are somewhat unsure of whether this strategy actually works, a survey conducted by the U.S. Public Interest Research Group back in 2002 might help convince you. According to the survey, there were fifty consumers who made a telephone call to their credit card companies and requested lower credit card interest rates. Fifty six percent of them were approved. The 28 consumers who were approved had their interest rates go down from 16 percent to 10.47 percent.
So, if you are thinking of asking your credit card issuer for a lower credit card interest rate, make sure to consider the following before you pick up your telephone.
- Negotiate your oldest credit card first. It is important that you start with the credit card with which you have the longest credit history as being a long-time customer helps. Of course, this is assuming the fact that you have a good history with them. If you have been delinquent on some accounts and have missed several payments, then you may be unlikely to have your request approved. Before calling, you might want to order your credit report as well as your credit score to check whether you see yourself as suitable to make this request.
- Talk to a person in authority. Many people who receive calls from bank clients do not typically have the authority to decrease your rates. So make sure that you ask, respectfully, for someone with whom you can discuss your request.
- Practice what you’re going to say. Keep in mind that the bank representative with whom you will discuss this matter will try to disapprove your request. When this happens, remind the representative how much interest they are charging you and compare the rate to that of another bank from whom you may or may not actually have an offer. Tell the representative that you are considering the other bank because you can better afford their rates. However, be sure to inform the representative that you want to stay with them, so you are asking if there is anything they can do. In this way, the representative may be more inclined to come up with a better rate for you.
- Expect to be disapproved. Sometimes all it takes is a little nudge. So if the representative you are talking to declines your request, ask politely if you could talk to his supervisor. Your persistence may work and you may be able to lower your rate–even just a bit can be helpful.
- Keep on trying. Do not stop negotiating for better credit card interest rates. If your request was denied, try again in a few weeks. Banks have several representatives and supervisors, so you may be able to discuss your request with a different representative who might be more willing or able to help.
- Be respectful and polite. Remember, even if you are the client, you are the one requesting a lower rate, so, keep your cool and always be respectful and polite to the person to whom you are speaking.
- Ask for a realistic rate. If your rate is already low, let’s say seven percent; then it is unlikely that you will be able to negotiate a lower interest rate. Only request a lower interest rate if your current interest rates are around 13 percent or higher.
- Consider transferring your balances. If you have several credit cards, another thing you can do to lower your interest rate is to transfer your current balances over to credit cards which offer zero percent interest rates and/or considerably low or no balance transfer fees. However, some offers expire in a year, so be sure that you are aware of the time frame in which you have to transfer your balances.
- Pay off your credit card balances. To prevent interest rates from becoming a burden, it would be best to have no credit card balance. Pay off your credit card debt. Avoid making only the minimum payment. Make an effort to cut back on some expenses so you can pay more than the minimum each month. This will help to clear your credit card debt more quickly.
Interest rates can be costly, so if you have credit card balances, follow the tips mentioned above to negotiate for better credit card rates. However, while having low interest rates is great, it is still best to not owe any credit card debt at all. Therefore, along with negotiating for better rates, work on paying off your debts as well.
Amy Johnson is an active finance blogger who is fond of sharing interesting finance management tips to encourage people to manage their personal finances.
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