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A quick late Christmas present that you can give yourself this year, especially if you’re planning on using credit cards, is to call for lower interest rates.
If you’ve been paying on time, and have a decent credit score, it’s usually pretty easy to get some kind of deduction on your interest rate. If you’ve been getting credit card offers in the mail, it’s even easier.
Here’s the process.
Standard bank-issued credit cards have the flexibility to lower their interest rates. Most store-cards won’t even give you the time of day on the subject (Sears, Home Depot, etc.) so it’s worth a try, but don’t expect great success.
- Round up all the credit card offers you’ve been getting. Single out the ones that have attractive rates (0% for 6-12 months, no transfer fees, etc.) ESPECIALLY the ones with lower interest rates than you currently have, if any.
- Mark on a sheet of paper, spreadsheet, or wherever each credit card, and it’s interest rate. The goal is to get EVERY card as low as possible by playing one against the other. Credit cards are in the business of making money, if you don’t carry a balance, they make no money. If you transfer money off the card to another card THEY MAKE NO MONEY. That’s the lever to use when talking to them. Order the cards, highest interest rate to lowest. Don’t worry about balances now.
- Call up the credit card with the highest interest rate, and start talking to them about lowering the rate.
- Be polite, but firm. They don’t have to lower the rate, and you want the customer service rep to be on your side.
- Reference the lower-rate (but not the specifics) and let them know that you’ll be transferring the balances unless they can lower your rate.
- Also explain that you are happy with the card and service (overall) but it’s the rate that you have a problem with. If you routinely carry a balance, they love to hear that you don’t mind paying them for the privilege.
- If they say they can’t lower the rate, ask why (probably won’t get an answer, but you might. If there’s something on your credit report you might have to clear that up before you re-attempt this).
- If you get the discount, THANK THEM. If you don’t, THANK THEM. Either way, the CSR isn’t the enemy, the interest rate is.
Additional (Optional) Steps
One additional step you might include, is to ask for no-cost balance transfers if you find that some of your high-interest credit cards have turned you down, but this is a secondary issue.
If you’ve been successfully chatting up the CSR on the phone, and you have a card or two that has already turned you down, it doesn’t hurt to at least ask for the balance transfer and possibly a credit-line increase at the same time to cover the transfers. Again, the worst they can tell you is no.
The most important part is to pay the credit card companies as little as possible for borrowing their money. They will work with you to retain you if you’ve been a good customer (i.e. given them LOTS of your money in the past) so use it to your advantage.
Credit, like a chainsaw, is a tool. You can use it to build a house, or become a star in a slasher movie. Just be careful and think ahead.
Bonus: Read this amazing (and frankly, somewhat terrifying) story on a person with a Million Dollars in Credit
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December 28th, 2007 at 10:56 am
Love the title, it totally applies here. These are some great tips. I’ve been using some of these very same ideas to lower my rates. Sadly, I think I’ve hit bottom. There’s a point at which they just won’t give you lower rates or balance transfers.
Specifically, I have a National City Visa with an interest rate of 19.99%. The CSR claims they don’t offer ANY lower rates. Ok fine.
And my Direct Rewards card refuses to make me a balance transfer offer. Apparantly they’d rather make 21.99% on my $o balance. Doesn’t really make sense to me, but they won’t budge
December 28th, 2007 at 11:53 am
Another option to consider is talking to the CSR’s supervisor. The CSR may not be authorized to change your rate. Or not to give you a really good deal. So very politely ask for the supervisor. Say that while the person was helpful, you were hoping they were in a better position to help you.
December 28th, 2007 at 12:22 pm
@Amanda,
Sometimes that’s all you can do. We went through the same thing. We got everything down to as low as possible except for 1-2 accounts, then just concentrated on paying them off. When some time went by, we started getting offers for transfers and such and then moved everything off the high interest cards. It’ll happen.
@MrsMicah,
Talking to the CSR’s supervisor works sometime, but you can also sometimes be talking to their co-worker in the next cubicle unknowingly. Still worth a try. The CSRs I worked with usually had no problem lowering the rates if they could, If not, usually even the supervisors were unable to make changes. YMMV though.
Thanks for the interesting comments!!
December 28th, 2007 at 2:13 pm
Great tips! Another tip would be to ask for a credit line increase on the card that ends up with the lowest interest rate. Then you can move more of your balances there to pay them off faster. Just watch out for the balance transfer fee. Thanks for the mention!