How to Negotiate a Lower Interest Rate on Your Credit Cards

When it comes to managing your money, you want to focus on areas that can bring you a bigger bang for your buck.  Paying high interest rates on credit cards is one of the most annoying feelings aside from hearing someone scraping their teeth against a metal fork (at least for me it is). I enjoy my chai tea lattes and I’m sure you have similar small indulgences that you don’t want to sweat over to save a few quid.

I’m often amazed how people don’t attempt to negotiate their credit card rates. It seems like they think the interest rate they are given is set in stone. Credit card payments can come in as the second highest or third highest monthly expense.

How much is the interest expense costing you each month or year? One way to lower interest rate is to transfer the balance to a zero percent credit card. I realize not everyone can opt for this. Your credit will need to be inquired on and if you have multiple credit cards, more than likely, this will not be a foreseeable option.

What are the benefits to negotiating your credit card interest rate? Imagine shaving off months to a year or more because you were able to reduce your interest rate. Effectively more of your payments will go toward your principal decreasing your overall debt at a faster rate. Plus, you’ll have an increase in your confidence and wonder in what other areas in your life can you negotiate.

I’ve seen credit card companies charge anywhere from 0% to 26%, and I’m sure there have been higher amounts. You’ve seen credit card companies offer 0% for balance transfers and on purchases. If they can offer this enticing offer, they have room to negotiate.

Why doesn’t everyone do this? I think it’s because people don’t have the confidence in themselves. The worst case scenario is you are told “no.” And, so what? If you don’t try you will never know. And telling yourself you can’t do it will not help. Stop telling yourself  you suck at negotiating. This is one of the worst lies you can tell yourself. I don’t care how you ended up in credit card debt. It doesn’t matter.

Lowering your credit card interest rates.

You could lower your credit card rates as quickly as in 5 minutes or you may have to do some extra work. Not all credit companies will lower the rate, but it’s worth a shot. I believe too often we expect things to be done at a snap of figure, or at least we would like it to be so. To make this effective for you it will require no laziness, sense of urgency, and focus. The best way to negotiate lower interest rates on your credit cards is to do your homework. It requires a little critical thinking and research. 

Be aware that on your first call you can expect the representative to lower your interest rate between 9% to 14%. This has been my observation and experience. But, this doesn’t always happen. Even if they lower your rate on the first call, you should still push further. Think of it as a way for them to appease you so they can move to the next caller who is waiting.

On the other hand, the first customer service representative you speak to could be of little to no help. They have limited authorization to do anything with your credit card interest rate. But from time to time, you may be able to get what you want. It depends on the representative.

To help you negotiate your credit card interest rates, I’ve outlined actionable steps for you along with a sample script.

1st Step: Get the info and get organized

This first step is all about gathering data and getting organized. Find out how much interest you are paying. Pull out all of your credit card statements or bring them online if you signed up for e-bill. Take out a sheet of paper or use Excel and create a quick worksheet to organize your credit cards. Write this down:

Credit Card Company: Balance: Interest Rate: Offers to new clients:

 

You will want to find out what your credit card company is offering new clients. It could be as easy as going to the company’s website or calling the company.

Know what the competition is offering

If you have received competitor’s offers, write those down, too. Research what other credit card companies are offering. Similar to the above outline write down the name of the company and the offer. You will then compare what the other credit card company is offering to what your credit card company is offering new clients. This will help you to negotiate. You will be better prepared to know who offers the better rates.

2nd Step: Negotiate

Call each of your current credit card companies and ask them if they can offer you a lower rate. It might be best to begin with the credit card you’ve had for awhile and where you never been late with payments. {You can easily find the phone number on the back of the credit card.} The first customer service representative you speak to is generally trained and is authorized to a certain limit to lower interest rates no less than a certain threshold, if they even lower the rate. They may even tell you that’s all they can do for you. Don’t take this as a final answer. Get their name and ask to speak to their supervisor immediately. If that supervisor doesn’t lower the rate, then ask for their supervisor.

What are you telling them on the call? Your job is to explain your situation. Discuss the comparison of your rate and what competitors are offering. And, simply, have the courage to ask if they would be willing to work out a better deal with you.

Sample Script: (always remain cool, calm, and collective when speaking to credit card companies)

Representative: {some type of scripted intro } followed with “How can I help you today?”

You: “Hi {insert representative name}.  How long have I’ve been a loyal customer?”

Representative:  “Looks like you have been a customer since 2009.”

You: “That’s 3 years.  I’m sure you guys appreciate me as a loyal customer, right?

Representative:  “Yes.”

You: “Well, I’ve received other offers, such as {recite the fantastic competitors’ offer you received}.  I’ve also noticed that you are offering new customers {the great deal they are offering}.   I’ve been happy with your service and I really don’t want to switch cards.  Even though I’ve been with you for 3 years I’m paying 16.99%.   What’s the best deal you can offer me to lower my interest rate?

Representative:  “I would be happy to assist to you. Let’s see…I can lower your rate to 14%.”

You:  “Thank you for looking into it for me.  But I believe I should receive less because  XYZ credit card is offering 0% on balance transfers for 12 months {or whatever the deal is} and you are offering {whatever the deal is} to acquire new customers.  How can you do better?

Representative: “That’s the best I can do.”

You: “Okay. May I speak to your supervisor to see about lowering the rate?”

Representative: “I will check with my supervisor.” Or,  “I will transfer you.”

 

At this point either the representative will come back with an offer that the supervisor gave or they will not budge.  If you get a chance to speak to the supervisor {make sure you get the name}, go over your situation again. If they don’t budge, ask to speak to the retention department.

If your interest rate will not be lowered any further mark your calendar and call back in a month. Or you can try calling again to speak to someone else.

Other things to ask when negotiating and can be used in the script:

  • Ask if they can offer you reward points that you can cash in to apply as credit toward your account.
  • Ask if they will waive the annual membership fee.
  • Ask what their balance transfer offer is and to apply the rate to your account.
  • Ask for a temporary fix—“ Can you lower my rate to 5% for 6 months? Then, we can reevaluate.”
  • Ask if the credit card company can reduce your interest rate to, say 5 percent,  you’ll be able to pay $50 (or $100 or you pick the amount) more than the minimum payment each month

Here some things to keep in mind.

  • It’s easier for a credit card to keep a customer than to acquire a new one.
  • Never be rude. Be polite, but be firm and clear in your tone.
  • Retention department job is to make sure you remain a loyal customer.
  • If you need to don’t be afraid to tell them you will close the account.

Resources to help with your research:

www.comparethemarket.com/credit-cards/

www.tsb.co.uk/credit-cards/credit-card-comparison/

www.nationwide.co.uk/products/credit-cards/ncc/features-and-benefits

www.lloydsbank.com/credit-cards.asp

Do you have any other tips or suggestions to negotiating a lower interest rate on your credit cards?

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