How to Negotiate Lower Credit Card Interest Rates

As you’re probably well aware (particularly if you read through my monthly Net Worth Updates), I’m currently in debt. More specifically, I’m currently in credit card debt (as well as student loan debt, but that’s a subject for a different article). It’s not as bad as it could be; compared to the people with six (or even seven) figure debt, I’m not doing too bad. Although, as I’m currently unemployed and not bringing in enough via this blog (yet…) to provide for my family, invest for the future, and pay down my debt, or even take care of a single one of those issues at my current income level, any debt is too much.

While I work to get this debt paid down, it’s good to utilize every advantage possible. One thing I’m going to try this week is lowering my credit card interest rates. (At least my Mastercard rate, which is currently at a back-breaking 27%, whereas my American Express is a much more reasonable 9%.)

Lowering my rate will be a great help in getting this debt under control. It’s a big part of winning the money war I currently find myself in, to say nothing of giving me a chance to provide more for my family. While I’m at it, I figured I’d help anyone who is currently in the same position as me to get their rates lower; hopefully, we’ll all have an easier time ending up debt free.

Gathering Your Ammunition

When starting any battle, it’s important to be prepared. While asking for your credit card interest to be lowered can be as easy as calling up and asking, it’s generally a good idea to get some backup information to help support your request, including:

-Your Credit Score: Your credit score determines how appealing you are to credit card companies as a debtor; the higher it is, the more likely you are to pay back your debt, and the more appealing you are as a credit card customer. If you have a high credit score, you’ll have a great deal more leverage when asking for a lower rate. Personally, my credit score is currently in the ‘Average’ range; not too spectacular, but it could be much worse.  (For your own credit score, check out annualcreditreport.com.)

-Your Most Recent Statement: If you’re going to argue for a lower interest rate, you’re definitely going to need to know what your current rate is. That will be found on your current statement, as will be such useful details as your current balance, your total credit limit, and of course, your account number. All will be helpful as you try to get your interest rate lowered, and while you’re thinking about lower interest rate offers:

-Any Other Offers You Have: You know what’s worse, from the credit card company’s perspective, than decreasing the interest payments they will collect by lowering your interest rate? Losing your interest payments entirely if you transfer your balance to another company. If you can gather some offers from other companies (either from the mailing you get or by looking through services like NerdWallet), you’ll be able to make a better case for your interest rate being lowered.

Making the Call

Alright, with all that gathered, it’s time to take care of the call itself. It might not be a fun process (particularly if you, like me, aren’t fond of this type of thing, and have been delaying making calls like this for that reason), but if you complete it, you can end up saving hundreds, possibly thousands of dollars as you attempt to pay down your credit card debt and otherwise get your finances in order. Here are a few steps to follow:

1. Be Sure You’re Ready for the Call: There are a few things you should do before you dial the number. Come up your target interest rate to request; it’s good to know what you are aiming for, as well as what you will shoot for as a second and third choice. (I’m trying for 9.9%, 13.9%, and 16.9%, myself.) Make sure you have all the information listed above, as it will be important when making your case.

2. Ensure You’re Talking to Someone with Power: Chances are, when you first call, you won’t be talking to someone who can change your interest rates. The initial contact is likely a low ranking call center worker. You’ll have to ask to be transferred to a manager or someone else with the authority to change your interest rate if you hope to get your rate changed. Once you are talking to someone who can change your rate:

3. Make Your Request Clearly and Plainly: There’s a lot of different approaches you can take when making a call like this, but the best way is to simply make your request: state your desire for a lower interest rate, give the rate you are hoping for, and emphasize that you have other options available. Then, all you really need to do is wait to hear whether your rate will be lowered. If it is, congrats! You’ve gotten what you were shooting for; head to step 5. If not:

4. Press Your Point: You might not get your first requested interest rate; I don’t expect to do so, asking for a 16% cut in my interest rate and all. That’s when you make your second request and share more about your other credit card offers, particularly any 0% interest rate balance transfers you have available. Try to negotiate the lowest rate you can, attempting to give and take with the manager in order to get the best rate possible. While you might not be able to get your rate down to nearly nothing, even a five percent decrease will save you quite a bit over time.

5. Be Polite When Ending the Call: Regardless of whether you get a twenty-two percent or a two percent rate decrease (or no decrease at all), keep your cool, be polite, and thank the person you are speaking to for their time and consideration of your request. Treat them professionally, and you might find yourself being well-treated in return.

If All Else Fails…

If you aren’t able to get a decent rate reduction, it’s time to look at some of your other options. You can carry out your balance transfer threats, moving your debt to a card that charges you less interest (preferably a 0% balance transfer rate, giving you a chance to pay off your debt without paying any interest). You could using a different type of debt to pay off your credit card, if you can get better interest rates or other conditions (I’d look into Lending Club or a similar service, myself; might as well allow other people to profit as you pay down your debt). Barring anything like that, simply work on paying down your expensive debt as fast as possible; if you can’t get them to lower the rate, you can still pay less interest by preferentially eliminating that debt.

There you go, some advice on getting your credit card interest rates reduced (much as I intend to do). Has anyone out there gotten their rates reduced, and if so, how did they go about it? Are there any other approaches you’d recommend instead?

Picture of American Express Card from Images_of_Money