Will Credit Card Companies Reduce My Credit Card Rate?
Fifty-one percent of American consumers surveyed by the FINRA Investor Education Foundation in December 2009 carried a credit card balance in the prior 12 months. Interest is imposed monthly on those balances, resulting in higher balances. Many of those consumers do not realize that some credit card companies may be willing to reduce their interest rates if asked.
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Benefits
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Consumers who regularly carry credit card balances may save hundreds of dollars in interest each year if they negotiate an interest rate reduction. A lower rate saves them considerable money because the interest charges are reduced. More of each payment goes toward reducing the actual account balance, which allows the debt to be paid more rapidly. The FICO credit score company notes that this can also improve the person's credit rating, because lower balances are more favorable to the score.
Considerations
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Credit card companies will sometimes lower a customer's interest rate on request. They consider that person's balance, payment history, the amount paid over the minimum requirement each month and the length of time the account has been open. They are more likely to agree to a reduction for a longtime customer who always pays on time, the BCS Alliance debt reduction website says. Consumers with credit score blemishes should build a steady record of on-time payments for six months to a year before asking for a reduced interest rate.
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Strategy
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Consumers can boost their chances for a rate reduction with special strategies. They should research competitive offers, for instance. This is easily done through online credit card search sites and by saving promotional offers that come in the mail. The offers are useful fuel during negotiations, according to the book "What Every Credit Card User Needs to Know" by Howard Strong. For example, a consumer can say, "I have been your customer for a long time and want to stay with your company, but I found three other banks with lower rates. I hope you can match them so I do not have to consider moving my credit card account."
Time Frame
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The Motley Fool personal finance website advises waiting a few months when a rate reduction request is denied, then asking again. It does not cost anything to ask for a lower interest rate, so persistence often pays off after a few requests. It sometimes helps to ask for a supervisor if an agent denies the rate reduction the first time.
Warning
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Consumers should make sure the interest rate reduction is permanent when they negotiate with banks. Credit card companies often give promotional interest rates for a short period. For example, the rate might be reduced to 5 percent but only for six months. Then it goes back up to the previous level, or even higher, when the promotion expires.
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References
- Photo Credit three credit cards image by Aleksandr Ugorenkov from Fotolia.com
