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How to Negotiate a Lower Credit Card Interest Rate

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By Eva Norlyk Smith, Ph.D.
June 2, 2011

Concerned about high interest charges on credit card debt? You’re not alone. With credit card interest rates at record levels, millions of Americans are paying thousands of dollars each year in interest.

Fortunately, if you play your cards right, it’s often possible to negotiate a lower interest rate on your credit cards. This not only saves you money on interest charges, it also gets you out of debt faster since more of the monthly payments will go toward paying down principal instead of interest. Even a 5 percent drop in the APR on a $10,000 credit card debt will reduce interest charges by more than $500 a year.

Most people know that it’s possible to negotiate a lower interest rate on credit cards, but many are reluctant to try. In a recent survey from Lending Club, 93 percent of those surveyed said that they were aware that cardholders can ask to have their credit card interest rate lowered. However, only 29 percent had actually called their card issuer to do so. Significantly, among the 29 percent who made the call, two-thirds were successful.

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 APR rates of 12 to 15 percent. If you pay more that that, it’s worth your while to negotiate a better rate.

To optimize your chances of success, follow the steps below when negotiating a lower rate.

1. Know your credit score.
First, pull your credit score to get an idea of what your chances are for getting your interest rate lowered and by how much. “Your credit card issuer won’t be interested in lowering your rate unless you have good credit,” says Sandy Shore, a senior counselor with Novadebt, a nonprofit credit counseling agency in Freehold, N.J. “Before you even try to call, look at your credit score and make sure you’re in a strong position.”

For people with bad credit, such as a credit score below 660, it’s typically more useful to improve your credit score first before trying to negotiate a lower interest rate. If this is your situation, consider working with a credit counselor to make the fastest progress.

2. Know your options.
Go online to check what rates the card issuer is offering to new customers. This will give you a realistic idea of what rate the issuer should be able to give you. In addition, check 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 that offer a combination of high initial credit limits and low interest rates. Be aware that cards with highly competitive rates sometimes come with low initial credit limits.

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 you 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. 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 representative you were talking to could simply be having a bad day. But if you call back, you may get better results.

5. Up the ante.
Representatives 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.

7. If all else fails, seek outside assistance.
If you can’t seem to negotiate an acceptable credit card interest rate, it can often be helpful to seek the advice of a credit counselor. Credit counselors work with card issuers all the time to seek better terms for clients, and they often know which rates a specific card issuer is willing to offer and under what circumstances.

“A lot of people think that you have to be in serious problems to speak to a credit counselor,” says Mike Sullivan, Director of Education at Take Charge America. “However, credit counselors can help you simply manage your finances better. I always suggest that people call a credit counseling agency even if they have no problems, and are simply looking for ways to manage their personal finances better.”

Credit counselors working for nonprofit agencies offer free services, so you have nothing to lose. By looking at your financial situation, a credit counselor will be able to see why you can’t get the rate lowered and suggest other options.

To find a legitimate credit counselor, look for someone working with an agency affiliated with either The National Foundation for Credit Counseling or the The Association of Independent Consumer Credit Counseling Agencies.

(Article updated 6-2-2011. Originally published 5-22-2009.)