You may have rejoiced when you heard that the Federal Reserve recently cut interest rates, but experts are saying that these cuts most likely will not help in getting your interest rates lowered on your credit cards.
Although you’ll likely not experience an automatic drop in your interest rates, it doesn’t mean that you can’t ask for one. I’m a big proponent of taking a proactive approach and contacting the card issuers directly in order to ask for what I want. Those of you that are regular readers know that I haven’t been shy about providing tips on how to contact credit card companies to get interest rates reduced, get rewards programs added to my cards, fees waived, etc. It never hurts to ask and, since there are so many cards out there competing for your business, you can probably find one that will offer the terms you want if you just take a little time to look.
Despite the fact that you can often get your interest rate reduced with a simple phone call to the credit card company, a recent survey found that almost 2/3 of people have never attempted to do so. Since the holiday shopping season is upon us, there is no better time than now to get your interest rate lowered to give yourself a holiday gift and a little more spending power.
Even a drop of a few percentage points in your APR can really add up. If you have a balance of $5,000, for example, dropping your interest rate from 18% to 14% can save you $200 in interest your first year alone.
If you are uncomfortable asking for an interest rate drop, you might want to simply follow this little script:
“I’ve been a good customer of your company for a while now. I’ve received many offers from other credit card companies with more attractive rates. I’d like to see you drop the APR on my card or I’ll just have to switch to one of these other companies.”
You might be surprised with the deals the credit card companies will offer you. Some companies will even offer a special 0% interest rate temporarily in order to keep you happy. While you shouldn’t necessarily expect this type of drop, you should expect to see at least a few percentage points come off of your interest rate. In addition, don’t be fooled by a company that drops your rate for a period of time and then goes back to your old rate. Insist on a long term change to your APR.
Of course, if you haven’t taken care to make your payments on time, you’ll likely not be able to get a decrease in your APR. So make sure you’re a good candidate to qualify for a lower interest rate before you start making requests and threatening to change to a different credit card.
You are a good candidate for a rate change if you have been paying on time and have stayed within your credit limit for the past six to twelve months. You are also a good candidate if you APR is over 12%, as the average APR is around 14.9%. Similarly, if you started out with a low rate, but it was increased several times, you should ask for a decrease. If you’ve had the card for several years, you’ll also have a great deal of power when it comes to negotiations. After all, it is cheaper for the company to keep you as a customer rather than trying to win you back.
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