High credit card interest rates have always been the bane of every cardholder. However, many cardholders are not aware that they can do something about the crippling charges without having to switch to a different card.
A 5-minute phone call to your credit card issuer could save you hundreds of dollars — or more — in interest charges.
If you’ve been a good customer, your credit card company will probably reduce your interest rate. But you have to ask.
How to lower your credit card interest rate
- Decide what rate you would like on your card. Be reasonable. You can figure out an appropriate rate by looking at credit card offers you get in the mail.
- Check your credit reports. If you have a healthy credit history, proceed to Step. 3.
- Call the credit card company and follow a script similar to the one below on how to ask for a rate cut.
- If you don’t get the answer you want, ask to talk to a supervisor or call again later.
A March 2016 survey from CreditCards.com found that 78% of cardholders who asked for a rate cut received one. Just 1 in 5 customers has ever asked the question, though.
“It’s kind of like asking the best-looking girl in school out on a date. The worst she can say is ‘no,'” says Mike Sullivan, spokesman for the Phoenix-based nonprofit credit and debt counseling agency Take Charge America.
Sullivan recommends calling your card issuer at least every 2 years to ask for a rate reduction. “Ask for something sizable,” he says.
What makes this so easy?
It costs card companies significant money to acquire new customers, so they’re going to do everything within reason to keep their good customers happy and keep them from taking their business elsewhere. That includes providing rate reductions.
“From what we’re seeing in the market, there’s just a tremendous amount of competition right now over credit card customers,” says Alex Johnson, director of the credit advisory service at Mercator Advisory Group, a payments industry consulting firm near Boston.
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Banks have relaxed credit standards in recent years, Sullivan says, which means more people are probably eligible for a rate cut than in the past.
But getting the card companies to say “yes” isn’t easy for everyone. Just 36% of customers under age 30 received a rate cut after asking, and one-third of African-American cardholders were successful, the CreditCards.com survey found. Household income and education level did not affect whether a cardholder’s request was approved.
What card companies look for
Here are some of the factors that go into a card issuer’s decision on whether to approve a rate decrease, according to the U.S. Public Interest Research Group:
- How long you’ve owned the card.
- The card’s credit limit.
- How much you owe on the card relative to the credit limit.