It’s not often that someone gives you a better deal just for asking, but that’s exactly what credit card companies sometimes do. Asking the company can sometimes bring down your APR (the annual percentage rate) by several points. Over time, this slightly more favorable rate can help you save hundreds of dollars of if you’re carrying debt on your credit card.
Let’s say you’re making $250 minimum payments on $5,000 worth of a debt with an APR of 18 percent. Normally that would take two full years to pay down the debt. If you manage to negotiate an interest of 10 percent, you’ll be able to pay down the debt two months earlier according to Bankrate’s credit card calculator. The savings might not be life changing but it makes a big difference.
Credit card companies don’t exactly advertise that you can get a lower rate, so here’s how you can negotiate better interest rates on credit cards:
The First Thing
There are no guarantees for success, as credit card companies aren’t in the habit of lowering rates. These high interest rates are how they rake in most of their money, after all. However, they’re also in the business of keeping customers satisfied.
If you’re a long-time customer who pays your bills and keeps a balance on your card, let the customer service representative you’re talking to know. It also doesn’t hurt to let them know if there’s a better offer elsewhere and you’re willing to close out the deal. Telling them all of this will increase your chances of successfully lowering the APR.
What to Say
There are some scripts out there that reveal what the most effective things to say are. They all follow roughly the same formula.
First, start off by asking for the lower APR while proving how good of a customer you are (been a customer for X number of years, always paid off bills, etc).
That might be enough to work. Or you’ll get a flat no. If it’s the latter, ask to speak to a supervisor to plead your case.
As always, stay cool and remain polite. Go in expecting to have your interest rate lowered but don’t feel entitled to it.
Maybe the person you’re talking to doesn’t actually have the authority to lower your interest rate. If that’s the case, don’t vent or take it out on the poor customer service rep. Kindly explain your situation and don’t vent even if they say no. It won’t help your case and both of you will feel bad about it.
Notorious gangster Al Capone is quoted as saying “don’t mistake my kindness for weakness.” While you don’t want to have Mafia-like negotiations over your credit card APR, it’s one of many useful tactics to remember while negotiating.
Even if you’re being polite and friendly, it might be prudent to lay down an ultimatum. Tell them there are better offers out there and you want to cancel your card if they won’t lower your APR. Whether you’re bluffing or not, it’s worth trying this out. At the very least it can help you get the ear of a customer service manager.
Alternatively, you can try some the carrot instead of the stick. If you have debt on other credit cards, tell them you’d be happy to transfer the balance over to this credit card assuming the APR is lowered.
What if it Doesn’t Work?
Despite all your best efforts, the answer might still be a firm no when asking for a lower rate. If you’re serious about saving money, it’s time to shop around and see what other credit cards out there. If that sounds like too much of a hassle, hold on to your card and try again in a few months or so. You might be luckier next time.