How to Negotiate a Lower Credit Card Rate

If you’re concerned about a high interest rate on your credit card, you should know that the annual percentage rate you pay is often flexible. Most cards have a variable interest rate, which means it can fluctuate due to several factors. One of these is the discretion of your card issuer.

Want to make sure your card has the lowest negotiable rate? Here are the best methods to request a rate reduction and how to make the most out of your credit usage.

Steps to Take to Lower Your APR

1. Gather Information
   The more prepared you are, the better. First, you’ll want to examine your existing credit card statements to find your current interest rate. You should also have a firm understanding of your current terms including payment due date, grace period and past card usage.
   
   If you have a history of making payments on time and in-full, and other patterns of responsible credit card use, you could use that as leverage during the negotiation process. It could also help to mention if you’ve been a customer with the credit card company for a significant period of time, demonstrating your loyalty.
   
   You should also take note of competitor rates. Like any company, credit card issuers need to stay competitive. If you can show that others in the industry are charging lower rates to similar cardholders, it could help your chances of getting yours lowered.
   
   Finally, you’ll want to know your credit score and, if needed, work to raise it. There are different opinions on a “good” score but as a general rule, try to ensure your score is 700 or higher. A good credit rating shows lenders your responsible repayment history and makes you a better candidate for a lower rate.
   
   
2. Ask and Negotiate
   Now it’s time for the tough part – making the call. You’ll want to call the customer service number on the back of your credit card and speak to a representative. You’ll need to personalize your conversation based on your situation, but here are some general rules:
   
   • Be polite and confident: Explain you’ve been a loyal customer and inquire about the possibility of getting a lower interest rate or annual percentage rate.
   • Back up your argument: State any lower rates being offered by competitors, as well as your own personal positive credit and payment history.
   • Be persistent: You may not get the answer you’re hoping for right away, but keep trying. Sometimes taking the extra time to explain your case or speaking to a supervisor with different authorities can make all the difference. Hanging up and calling again to speak to someone else is also a method that may work. As a rule, don’t call back more than once or twice. Some policies are set in stone.
   • Treat the conversation as a negotiation: Make sure you’re explaining your case and are willing to be flexible on final terms. This conversation is a negotiation, not a demand.
     
     
3. Follow Up
   Once you’ve negotiated the new lower rate, ensure you follow up to receive the new terms in writing to keep for your records. You’ll also want to calculate your new payment amount and any other information that may have changed, such as due date or late fees, so that you can adjust your budget accordingly.
   
   Make sure you closely monitor your next few monthly statements to ensure your new rate is reflected and the interest charges are accurate.
   

Did you know? APR and interest rate are different. A credit product’s interest rate is the cost you pay for borrowing money. The Annual Percentage Rate (APR) is a comprehensive measure of the interest rate, plus any additional fees charged with the loan. Both are expressed as a percentage.

Other Options

If your request was denied, don’t panic. There may be other options to receive a lower interest rate.

• Balance transfers: Many credit cards offer an introductory offer with 0% APR on balance transfers. You could find one you qualify for and transfer your existing balance to avoid paying interest and possibly pay your balance down quicker. Just ensure you refrain from opening too many accounts and damaging your credit score with too many hard inquiries.
• Improve and try again: If you were denied due to factors within your control, you can always call and ask again after your situation changes.

The Bottom Line

We’d be remiss if we didn’t mention that the best way to save money on interest is by only making purchases you can afford to pay off in their entirety each month. By doing so, you’ll never pay a dime in interest.

That said, if you have found yourself in credit card debt, make sure you’re getting the lowest interest rate possible. Securing a lower interest rate may be as simple as asking your current credit card issuer to lower yours. In other cases, it may be necessary to improve your credit score or transfer your balance over to a 0% APR credit card to help you hit your financial goals.

OMB and its affiliates do not provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decision.