How to Ask for a Lower Credit Card Interest Rate (APR)

How to Ask for a Lower Credit Card Interest Rate (APR)

June 22, 2020         Written By Tracy Farnsworth

Credit card interest rates vary from one person to the next. That is why you will see a range of averages rather than one specific number. Some credit card companies tend to have average APRs in the 20% range, while others have APRs in the 15% range. People with lower credit scores may have higher APRs than someone with a high credit score.

 The higher your interest rate, the more you pay over time. That increases your debt. Your payments are covering more interest than they are purchases, which means you will be making years of payments and slowly chipping away at debt. The only ways to avoid paying a lot in interest is by paying off your balance every month or negotiating the lowest possible credit card interest rate. Do not expect your credit card company to review your account and offer you a lower rate. You have to ask for a lowered rate and you have to have a good argument ready when you call cardholder support.

 What is the most effective plan for getting a credit card company to lower your rate? Again, it depends on your situation. These are the steps to take when you are looking for a lower rate. What is most important is that you take a few minutes and ask. The worst that happens is your request is denied. Even if you hear “no,” you do not have to settle for that answer. You can go see how eager the competition is to get your business and switch to them.

Follow these steps if You Would Like a Lower Rate

 Check Over Your Credit Report

 Before you do anything, get a copy of your credit report. Look over your report to make sure you have not missed a payment or paid late. Check for errors. If you spot errors, send letters to the credit reporting bureaus and ask that they be corrected. If you have errors or late payments, it weakens your argument. That does not mean that you can not try for a lower interest rate. Be prepared to explain why the payment was late. If you still owe money, you want to get your payments caught up before you request a lower interest rate.

 There is an exception to keep in mind for missed payments. If you were laid off or are unexpectedly unemployed due to an injury or illness, you should call customer support before your due date. If you explain that you have been laid off, the credit card company may temporarily waive late fees or other penalties. They may also temporarily lower your payments while you are dealing with a lower income level. If you do not say anything and cannot make your payments on time, you are going to have less leverage when it comes to renegotiating an APR later.

 Make a Clear, Direct Request

 Before you even call, jot down a quick question. If you are clear and concise, it is better than stumbling through your request. Keep it simple. Start by giving your name, saying how long you have been a customer, and say you want to renegotiate your APR. After the introduction, ask clearly “What can you do to make my experience with your company better?” or “Can someone help me get a more competitive credit card rate?” Once the request is made, you can back it up with more information. For example, you could explain your co-workers all have much better APRs, and you do not understand why since you have been a customer for twice as long. You could ask why the average credit card rate is X, but you are being charged Y and have never missed a payment.

 Look up the current average APR for credit cards. If you are several numbers higher than the average, it is a good time to ask for a lower rate, but do not ask for too low a rate. A good rule of thumb is to ask for a rate that is a couple of percentages lower than the average APR. If the average APR is 16%, ask the credit card company for a 15% interest rate. The credit card may counter with a 16%, and that is lower than what you currently have, so you are still getting a lower rate. Instead of immediately accepting that offer, ask to speak to a supervisor.

 If you back up your request with a valid argument, you are more likely to get a favorable response. Just remember that even with a clear, direct request, you might not get the answer you wanted to hear. At that point, you need to weigh your options.

 Get Ready to Ask and Ask Again

 You know what you are going to say. You have your arguments to back up your request. What is next? Make your request. The cardholder support agent knows that the company relies on cardholders like you to stay in business, so you do hold the advantage. You also hold an advantage because it is not common for cardholders to request a better rate.

 While you are talking to the call center representative, you are not getting far. The employee acts like he/she does not understand your request or keeps saying they can not renegotiate credit card interest rates. Ask to be transferred to a supervisor at that point. Sometimes, you get better results if you talk to an employee with more authority to make changes to your account.

 Stay firm. In 2016, the U.S. Public Interest Research Group had two employees call to negotiate a lower APR from their credit card company. One of the employees called Chase, who denied his request saying they simply were not renegotiating interest rates at that time. The other employer called Discover and was able to talk them into lowering his APR by 3% for a full year. He was surprised by the ease of negotiating a lower rate. Other studies have found similar success rates (well over 50%) with those who called to negotiate a lower rate. In fact, an earlier U.S. PIRG study found that some cardholders were able to negotiate an APR reduction of just over 5.5% when they took the time to call. An interest rate drop of that nature is going to save you thousands in interest each year.

 Those who did get their request approved tended to have four things in common. They were:

  • The cardholder had a long history with the credit card company
  • The credit utilization ratio for the card was low
  • The credit card had a high credit limit
  • There were no missed or late payments

If you meet the criteria, the chances of being denied an APR reduction are minimal. You can use the savings to pay down your credit balances and improve your credit score.

Feel Free to Shop Around

Your credit card company refuses to lower your rate. You have asked and been denied. Make sure you have an explanation into why you were denied. If it is due to your credit history or credit score, take strides to improve it. Pay down your credit balances. If you are behind on payments, catch up first. Give it a few months for your credit history to show the improvements.

At that point, ask your credit card company one more time if they will lower your rate. If the answer is still no, thank the person you talk to. Do not say anything more yet. Start researching credit card companies that offer credit cards to people with your credit score. Narrow down your options and get preapproved. Preapproval is key. It gives you an idea if a card issuer will work with you. While it is not a guarantee, it only requires a soft pull of your credit. Soft pulls do not factor into a credit score.

After getting preapproval, apply for your first choice. Make sure they offer free balance transfers as part of the introductory offer. It saves you money. If your first choice turns you down, move to the next choice. Just remember that this type of credit card application requires a hard pull of your credit. That does show up on your credit report.

Once you know you have been approved and can transfer your balance, do so. Keep checking both of your credit cards to make sure the transfer is complete. It may take a month for this to appear. Now, you have to decide if you should close your card or leave it sitting. If you have a lot of credit cards, you might want to close that card. You should also do this if there is an annual fee or monthly maintenance fee on the high-interest card. If not, it is better to cut up the card and simply never touch it again. The untouched open credit will improve your credit utilization, which improves your credit score.

Apply With Confidence

You do not have to deal with high-interest rates. There is a credit card company out there who will meet your needs. You might have to concede a few of your credit card must-haves, but most companies will meet you halfway. Apply for a new credit card with a favorable interest rate and enjoy the savings.

The information contained within this article was accurate as of June 22, 2020. For up-to-date information on any of the terms, cards or offers mentioned above, visit the issuer's website. Many of the offers on this article are from our affiliate partners, and LowCards.com may be compensated if you take action with any of our affiliate partners.

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tracy

About Tracy Farnsworth

Tracy Farnsworth went straight from a business track in high school to a full-time job in mortgage banking in Burlington, Vermont. After having children, she built a freelance career in content writing and took online classes as time allowed. She completed Social Media Marketing and Digital Marketing certificate programs with Ireland's online Shaw Academy and completed several courses in SEO and analytics. In her free time, she's the “mom” to a very clingy rat terrier, and the pair walk at least a mile every day. She's also a novice baker who is trying to master the art of sourdough bread.