Call Your Credit Card Company
Believe it or not, you can call your credit card company to negotiate a lower rate. If you believe the interest rate on any of your credit cards is too high, take a few steps to prepare for a phone call with your credit card company. Before You Call
- Have your credit card statements organized and with you. Review them carefully to see if you have any recent late payments or other negatives. If you do, you may want to wait a few months. The credit card company will likely review your account. If you have late payments, they may actually raise your rate.
- Have a pen and paper ready to take notes.
- Know the current prime interest rate.
- The primary card holder needs to be available, if not actually making the call.
- Set aside as much as half an hour of time per credit card; you may be put on-hold more than once.
- Understand that some cards have more flexibility than others. Store cards and cards that give rewards might be less flexible.
During the Call
- Be sure to be polite.
- Let the representative know that you want to continue using the credit card, and ask if it’s possible to have a lower interest rate.
- If you have offers from other credit card companies with lower interest rates, you could say that though you would like to continue using this credit card, without a lower interest rate, you might transfer your balance to another card.
- Listen carefully to what they say.
- Some representatives have more authority than others. Some can help you right away. With others, you may need to ask to be transferred to a supervisor.
- Take careful notes, and don’t be shy about asking the representative to repeat or clarify what they are saying.
After the Call You may or may not get a lower rate. If you don’t get a lower rate, hopefully by the end of the phone call, you understand why. Armed with this information, you will probably know what you need to do so that you can call them back in six months. If you get a lower rate, be sure to ask when it will go into effect, and check you credit card statements for the lower interest rate.
Opt Out of the Interest Rate Increase
Opting out of an interest rate increase on your credit cards almost sounds too good to be true. You mean all I have to do is say, “No thanks,” to the higher rate? Not exactly. If So, with an End to the Account If you have received notice that the interest rate on your credit card is about to increase, you might be able to opt out. Some credit card issuers allow you to opt out, others do not. If you can opt out, most credit card companies will close your account. You will still have the same balance on the card, and must pay off the debt. You will simply not be able to make more purchases with that particular credit card. Or with a Reduced Credit Limit Other opt-out policies have other conditions. If your account is left open to make more purchases, you will keep the same interest rate, but your credit limit might be reduced. With a reduced credit limit, the balance on your cards may be a much greater percentage of that limit. A higher utilization ratio, where the balance carried on a credit card is closer to its limit than to zero, can damage your credit score. Carefully read and understand any fine print. Put It in Writing If your credit card company allows you to opt out, you must write them a letter to decline the rate increase within a certain period of time determined by the credit card company. When you receive a notice that your interest rate is going to increase, read the fine print. If the credit card issuer allows you to opt out, somewhere in the tiny legalize, they will tell you the time frame in which you must write to opt out. Miss the deadline, and you can’t opt out. If you can’t find or understand the credit card company’s opt out policy, give them a call. Give yourself some coverage when you write the credit card company to opt out. Get delivery confirmation when you send the letter for proof that the card issuer received your request to decline changes to your account, and keep a copy of the letter for your files.
Use a New Credit Card, but Keep the Old One
Transferring your balance from one credit card to another may sound like an obvious choice. However, credit card companies are more cautious than in years past. You may have to have a good credit score to get a better interest rate. If you transfer you balance to another card, keep your old card. Closing that old account and chopping up the card will lower your overall credit limit, thus lowering your overall utilization ratio. If the old card is in fact old, it has been contributing to the age of your credit history. Closing that account could shorten the age of your credit history, harming you credit score. Keep the old credit card safe, and use it occasionally for small purchases that you completely pay off when you get the bill. Your credit score will thank you.
The Lowest Interest is Always Zero
The best way to lower your interest is to completely pay off your credit card balance each month. No matter what your interest rate is, you won’t be paying any.