Q&A Articles

Do’s and Don’ts of Negotiating Credit Card Interest Rates

Credit card interest rates aren’t etched in stone. In order to retain business, creditors may lower the interest rates of responsible credit card holders who make the effort to ask. A 20-minute phone call could help you drop a few percentage points, but many often wonder: is it worth it?     Young woman on the phone negotiating credit card interest rates.

Let’s take a look at the numbers. If you have $5,000 in credit card debt with a fixed interest rate of 18%, you’ll end up paying more than $2,900 in interest alone if you only submit the minimum payment each month.

Now, let’s say your interest rate is reduced to 13%. In this same scenario, you’d pay about $1,800 in interest, which is a difference of $1,100. Better yet, if you have an interest rate of 10%, you’ll end up paying a little more than $1,200, a difference of $1,700. That’s a significant savings for any household. (Check out our financial calculators to see how various interest rates can affect your financial situation.)

Whenever possible, we recommend paying more than the minimum monthly payment. Yet this example gives you an idea of how a few percentage points can impact your total debt amount. We can’t guarantee every consumer will be able to lower their interest rates with a phone call, but it’s certainly worth a shot with thousands of dollars on the line.

In this part of the “Take an Interest in Your Interest” series, we’re offering valuable do’s and don’ts for negotiating credit card interest rates.

Do Have a Legitimate Reason – Creditors can’t lower interest rates without a reason to do so. Research and compare credit card terms and rates from numerous companies. (Bankrate.comCreditCards.com and WalletHub.com are excellent resources for credit card research.) Can rival companies beat your current interest rate? If so, give you current credit card company the chance to match.

Don’t Lie About Your Credit Card History – Customer service representatives can easily pull up your credit card history while you’re on the phone, so there is no use in bending the truth. Be honest when negotiating credit card interest rates.

Do Ask to Speak with a Supervisor – Customer service representatives don’t have as much authority to alter an account as their direct supervisors do. If you feel you have a legitimate reason for a lower interest rate yet are denied on your first try, ask to speak with a supervisor to state your case.

Don’t Act Rude or Impatient – A calm and composed demeanor isn’t the deciding factor for determining an interest rate, but it certainly doesn’t help to act forceful or impatient. You’re more likely to get help if you speak in a respectful manner when negotiating credit card interest rates.

Do Understand Your Limits – Every credit card company sets standards on interest rates which are based on your credit history. If you don’t qualify for a lower rate, then you can’t count on a phone call for a quick fix. Work on building your credit, and then ask again once you’re in a better financial position.

If you’re running into challenges working with creditors on your own, our free Credit Counseling may be able to help you make progress.

Looking for alternatives to high credit interest rates?

We can help. Our online credit counseling will:

  • Provide a free financial assessment
  • Determine your income, expenses and total debt
  • Create a manageable budget
  • Suggest solutions to help you reach your financial goals, which may include a Debt Management Plan

Clients on a Debt Management Plan typically pay off credit card debt in 5 years or less. Sounds good, right?

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