How to Negotiate a Lower Credit Card Interest Rate with Your Card Issuer

By Eva Norlyk Herriott

If you have high credit card debt, one of the best ways to save money is to look for ways to lower your credit card interest rate. Even a 5% drop in the APR on a $10,000 credit card debt will reduce interest charges by more than $500 a year. If you use this savings to pay off your credit card faster, you can save you a significant amount of money over time.

As the economic crisis deepens, credit card defaults are reaching historical levels. As a result, credit card issuers are taking steps to shore up their sagging bottom lines, and the rules of the credit card game are changing fast. Here are four credit card trends to watch out for.

If you have a good credit score, low levels of debt in relation to your available credit, and don’t have any late payments on your credit cards, you are in a good position to negotiate a lower interest rate. People with a high credit score should be paying competitive rates of 10 – 14% APR. If you pay more that that, it’s worth your while to negotiate a better rate.

Here are some steps to take to optimize your chances of success.

1. Prepare in advance. When it comes to negotiating lower credit card rates, preparation really pays off. Pull a free copy of your credit report and find out what your credit score is. If your score is above 720-730, you’d qualify for the best credit card offers with the best interest rates, were you to apply for a new credit card.

2. Know what your options are. Look online for low interest credit card offers to see what interest rate someone with your credit score could get when applying for a new credit card. Your best options are low interest credit cards from, e.g., Citibank, Discover, and Capital One, which offer a combination of high initial credit limits and low interest rates. While there are cards with more competitive rates, these come with a low initial credit limit of as little as $1,000.

3. Call your credit card issuer. Explain that you’ve been exploring low interest credit card offers online. Refer to a couple of competing low rate credit cards you’re considering applying for. Then note that you’d prefer to stay with your current card issuer, if they can offer a more competitive interest rate on your account.

4. If you don’t get anywhere, call back in 30 minutes. If you don’t get an offer from the first person you speak to, don’t push the point, and just politely end the call. Then call back in 15-30 minutes, and go through your script again. There are thousands of people working in card issuers’ customer service departments, and there is a surprising difference in how each of them will respond to a request. The rep you were talking to could simply be having a bad day. So trying back after a short while can sometimes get you better results.

5. Up the ante. Reps will rarely give you their best offer first time around, so if you get the offer, make sure it’s the best available. Say, “I was looking for something a little bit lower. Is this the best rate you can offer?” If you get a better rate, take it. If you don’t, chances are that you’ve already been offered the best rate you’re eligible for.

6. Bump it up. If you don’t get offered a lower rate the second time around, ask to speak to a supervisor. Supervisors have greater authority to make changes to accounts, and you can often make greater progress with someone higher up. Go through your script again, and remember to be polite and professional—if you get angry and frustrated, it will only work against you.

How successful is this strategy? If your credit score is good, your account balance low, and you have no late payments, you should have a good chance of lowering your rate. In one test by ABC’s Houston based KTRK-TV, half of the people who called their card issuer succeeded in getting their rate lowered by as much as about seven percent. And that was just by making a call without any preparation. If you do the background research, find out what you should be able to qualify for and follow the recommendations in this article, you might well do better.

If you don’t have a high credit score and/or if you have a high balance on your account or late payments, you need to follow a different strategy. Check out our Credit Card Tips area to find other articles about this topic.

Published: May 22, 2009