How to Negotiate Credit Card Interest Rates - Penny Pinchin' Mom (2024)

Want to negotiate your credit card interest rate? These tips might come in handy.

We have shared manytips on how to get out of debt. Another thing that many have tried to do is to lower interest rates. But, how do you negotiate your credit card interest rate? I mean, is that even possible? Yes. It is.

What many people may not realize is that interest rates are not set in stone. There is flexibility to the rate you are charged. However, you need to make sure you approach getting it lowered in the right way.

DOES IT MAKE THAT MUCH DIFFERENCE?

Believe it or not – it does. For instance, if you have a credit card with an interest rate of 18% and a $5,000 balance, you will pay in excess of $2,900 in interest alone over the life of the debt.

If you are able to negotiate your rate down to 10%, you would pay around $1,200 in interest. That is a savings of more than $1,700!! Keep in mind again that this interest calculation is based upon paying a minimum payment only – and nothing more.

Also see: How much is too much credit card debt

If you know it will take a longer period of time to pay off your debts, a lower rate can help. That will reduce the amount you end up paying back to the lender.

HOW DO YOU DO IT?

Before you make a the call, make sure you have done your homework You want to be ready to talk with them about possibly reducing your rate. Here are some things to keep in mind:

Do your homework. A credit card company is not going to lower rates simply because you call and sound like a nice person in a financial bind. That is just not it works. However, they will consider it if you find a competitor who has a lower rate.

Keep in mind that they will not consider introductory rates, but rather, on going rates. They may be more willing to reduce your rat if you can provide you can get a better rate elsewhere.

Speak with the right person. If you are serious about wanting to negotiate your rate, ask to speak to a supervisor. The credit card customer service rep usually does not have as much authority or flexibility in being able to reduce your rate. By speaking to a supervisor, you may have betterluck.

Call at the right time. If you are struggling and really want to reduce your rate, allow your account to be delinquent for 90 days. After that time, the credit card company realizes you are struggling to make payments and that may open up the conversation to a potential rate reduction.

The 91 – 179 day window is the best for possible rate reduction. The reason is that once an account has been delinquent for a period of 180 days, they sell off the debt to a collections company. This will result in their receiving pennies on the dollar for your outstanding debt. They would be much happier on doing what they can to get a little less interest from you than little to nothing on your debt.

Be polite and honest. Whatever you do, be nice to the person on the phone. Being rude or impatient will not help your case – at all. Make sure that you also do not lie. Do not say you have never had a late payment on any card if you have not. They can pull up your records and see if you are telling the truth or not.

If you are struggling to make your payments due to a job layoff, or illness, let them know. If they realize you have little to no income, they may be more willing to discuss a rate negotiation with you.

Be prepared to be told no. If you do not have a good credit history, your chances of receiving an interest rate reduction are greatly reduced. In fact, you might take some steps to repair your history before you even attempt to make a call.

Consider closing the account. If they refuse, you might want to just go ahead and close the account for future activity. If you are trying to get out of debt, this might be the best solution anyhow. Make sure that you tell that to the rep and ask for them to send written documentation of the same.

You may not be successful in getting your rates reduced. But, at least you will have tried.

No matter what you find out, continue making your payments on time. Try to pay more than the minimum payment each month if you can. If you still can’t get a better rate, you might consider opening a new card and transferring the balance there.