How Can I Use My Good Credit Score to Get a Lower Interest Rate on My Credit Cards?
You just might be able to get a lower interest rate on your credit card by — believe it or not — calling and asking for it! Especially if you’re a loyal customer or have good credit.
It sounds too easy, but think about it: The interest rate on your credit card is, essentially, just an agreement between you and the issuer. That means it’s open to negotiation. So although the issuer has no legal obligation to lower it, you have no legal obligation to remain a customer either!
If you have a good credit score or your score has improved since you opened the account, you have a great shot at a lower annual percentage rate (APR). Long-standing customers and those who haven’t had recent unpaid bills (at least six months of on-time payments) also have a better chance.
Another point to consider: Your credit card company can borrow money at the federal fund rate, which is usually in low-single-digit percentage points. However, cardholders like you are borrowing from the issuer (if you carry a balance) at far higher rates — 16%, 18%, sometimes well over 20%. So there’s probably room for a compromise.
Also working in your favor is that there’s plenty of competition in the credit card market. The cost to acquire a new customer may be as high as $100 or $200, so it makes sense to keep a card customer in the fold.
The bottom line is your request for a lower APR has a pretty good chance of being accepted. And don’t be afraid to ask for a very steep drop. Depending on your current rate, start negotiations at a 5% or even 10% reduction.
What should you say when you call? I recommend you be polite and non-threatening, but firm. “Hi, I’ve been a customer for a while, I pay my bills and have good credit. I’ve gotten many offers from other credit card companies with lower interest rates. So I want a lower APR on my card with you, or I may consider switching. Can you help?”
If you pay off your balances every month, then you may think you don’t need a lower interest rate. That’s a fair point, but what happens if, just by accident, your monthly payment is received late? Then you’d pay a higher late fee than you would otherwise.
If you do order your credit score, make sure you get your three FICO scores. And if you do switch to a lower rate, don’t close a long-standing credit card account — your credit score will drop substantially.
