Secrets of Negotiating Credit Card Interest Rates

Discuss anything related to interest rates & fees, like balance transfer offers, low rate cards, annual fees, etc.
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Secrets of Negotiating Credit Card Interest Rates

Postby CreditCardGuru » Wed Apr 02, 2008 2:43 pm

Two steps for negotiating a lower interest rate on your current credit cards, this also can work for balance transfer offers.

Step One:
Figure out which credit cards have lower interest rates than your current card. I’m not talking necessarily about introductory rates because those will always be lower. Rather seek out the cards (or even current low interest credit cards you may already have) that have lower interest rates.

For example my Bank of America Financial Rewards Card has a 16.99% interest rate. Meanwhile both of my American Express cards which I’ve had for years have 9.99% rates. Does this mean American Express always offers a lower APR? Not at all. My neighbor happens to have an American Express and Bank of America card too. His Amex has a higher interest rate than his Bank of America card.

Unfortunately there's no universal answer as to whom has the lowest rates since it varies person by person. Why does my neighbor get a better deal on his Bank of America credit card than me when we both have great credit? For starters, he has a better relationship with Bank of America. He uses their card frequently. On the other hand, I'm the opposite... It just works out for me that I use my American Express cards for 70% to 80% of my credit card purchases. As funny as it may sound, relationships with credit card companies can be like those with friends. The longer you've been together and know each other, the more likely they'll do favors for you. So never throw away a "good relationship" you have with a creditor.

Step Two:
Give your credit card company (highest rate ones first) and call and explain to them how you are considering closing your account and going with a different card that has a significantly lower interest rate. If you have a been a cardmember a long time with them be sure to bring up your history as a customer. If you have never made a payment late be sure to mention that also.

With the current economic conditions credit card companies are more jittery than ever about lending money. So sell up the fact that you are a trustworthy and loyal customer. Request an APR that matches the lower rate card you chose in step one. For example if I had a balance on my Bank of America card I would contact them and request the interest rate be matched to my American Express. If you remain stubborn on the phone with them and have good credit, negotiating credit card interest rates is usually not all that hard to do.

Some important notes to point out:
  • Reward cards almost always have higher rates than credit cards without any type of rewards. If you’re carrying a balance you’re almost certainly going to be better off carrying that on a card that does not offer any cash back or points.

  • Credit card issuers that also cater to sub prime or people with below average credit usually with have higher interest rates. These companies include Capital One, HSBC, Orchard Bank, and several others. If this is the card you are trying to negotiate interest for, give it a shot. However you may have more luck with others which cater to average or above average credit such as Chase, Citi, American Express, etc. This is not always the case however, many cardholders with Capital One do have lower rates than American Express. There's no universal answer - you'll never really know until you check.

Last updated March 5, 2011


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fffresh
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Postby fffresh » Sat Jun 07, 2008 1:45 pm

I actually have that Amex you have featured as the 'card of the month' on the homepage which of course is a rewards card and surprisingly I get a lower interest rate on that than any of my other cards. On that Amex I get the prime rate as interest which I think is 5.25% right now. Fricking awesome deal so I don't mind having a balance.

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Other Sneaky Secerts...

Postby JEFF COGA » Tue Aug 19, 2008 12:42 am

What CreditCardGuru stated is completely true!!! All the interest rates are negotiable!!! NOW, here are some things you will never learn unless you have worked at the bank... it's all smoke and mirrors

1. ALL RATES ARE NEGOTIABLE TO SOME DEGREE ONLY IF YOU ASK!!!
- The key word is ASK!!! All reps are trained not to budge on interest rates unless the customer asks. (ex. if you say something like... "do you think this rate is too high" "WOW!! My other card gives me 12%" " I'm paying what"... etc etc)
**bottom line: if you do not directly ask the question... "CAN YOU PLEASE LOWER MY INTEREST RATE" reps will not do anything.
- I had a customer who had a FICO of 530 was paying an % in the low teens - dropped interest rates to 6.99% fixed (no other history)

2. IF THE FIRST REP CANNOT DROP THE RATE DOWN
- Be polite and say "may I speak to someone who can help me"
- 9 out of 10 times they (the rep) will put another call rep on the phone... never manager (I know, I was trained to teach this)
- You typically you need about 3-4 transfers to get someone with actual power.

3. KNOW WHICH DEPT YOU ARE TALKING TOO!!
- If the rep talks fast and polite you probably have a customer satisfaction rep (very good to have late fees, OD fees, BT fees and etc waved)
- If the rep tries to build report and pitches curtain product or services - you have a sales rep
- If the rep is very smooth and really really tries to build report - you might have been routed to the top sales people for a pitch (YES, banks do route calls for profitability)... typically they have much more power then the ummm... uhhh service reps

**BEST REPS FOR APR CHANGE!!!***
- Balance Transfer Departments - these reps usually have ability to negotiate contractual rates and balance transfer rates. They also get paid commission on the amount BT you do (I'm sure you knew that!!) Tell them you are interested in a BT but you're hesitant because of the CURRENT interest rate is TOO HIGH... If they need to hit quota to get paid out... I'm sure they can help you =)

I'll post more replies later... It's getting very late... I hope this helps
Jeff Coga
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Postby fffresh » Tue Aug 19, 2008 1:16 am

Jeff these are some great tips! I actually didn't know customer service reps made commission on the amount of balance transfers. Can you negotiate on the interest you pay on the balance transfer too? When I did one before I got the 0% but only for 9 months and it took a lot of haggling to get - this spring with Bank of America.

Thanks again for the tips.

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Postby JEFF COGA » Tue Aug 19, 2008 12:23 pm

fffresh wrote:Jeff these are some great tips! I actually didn't know customer service reps made commission on the amount of balance transfers. Can you negotiate on the interest you pay on the balance transfer too? When I did one before I got the 0% but only for 9 months and it took a lot of haggling to get - this spring with Bank of America.

Thanks again for the tips.


I know of that bank very well ;) and yes haggling is a big part!!! The customer service rep is a customer service rep... if you get a "balance transfer specialist" or an "account manager" typically they can do much better deals... for example, you 0% 9 months probably was the best deal - also transfer fees are negotiable from getting a cap to no cap.

Also, be careful on how you do your BT... if you pay off the BT within 9 months its awesome for YOU... BUT for the bank, they are losing tremendous amount of money... meaning the bank will keep track of these records and you can be black listed in the system as what we called CH a "RATE SURFER" (someone who is using promos to pay down debt-going back and forth from one card to another)... once you are black listed is it very difficult to get a rate under 4.99%...

Oh and yes they make commission so they have incentives to give you good rates, especially if they haven't locked in the commission towards the end of the month =)
Jeff Coga
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Postby Mogul of Pineapples » Wed Aug 20, 2008 2:20 pm

Hey Jeff thanks for this insight. Do you know if the length of the 0% (or whatever the balance transfer APR is, is negotiable too?) I've always wondered if they say 0% for 9 months could really mean 12 or 15 months if you just haggled them?

This "rate surfer" term is new to me. I always anticipated there was something in place like this though. But is this an internal tracking system (only at that bank) or is it a database shared among all credit card companies?
Disclosure: I am a moderator/paid staff of this site, which does have advertising relationships with some credit cards that are discussed and linked to. Regardless, anything I say is my honest opinion.

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Postby JEFF COGA » Wed Aug 20, 2008 11:27 pm

Yes it is negotiable!!! THE KEY is not to be black listed... Just keep in mind, for a bank to profitable they would have to give CH an interest rate of 14.99% to break even... I KNOW, it sounds CRAZY!!! (This is a long explanation so I'll write an article about this later...)

Since the banks are giving away 0% at a lost... they absolutely keep track of every little thing you can imagine.

Not everything but here's what they do:

- track where the BT payment went (what creditors) and at what rate/duration (calculation purposes when you "rate surf" back)
- when you took out the next promotion rate and how much you take out (see if the balance grew, declined, stayed same - checking to see if your profitable)
- monitoring credit profile to see when the competitors balance changed and to what amount (same as above - checking profitability)
**this gets really deep and only upper management knows of this - most people who answers the phone will not**

**oh, and for legality issues they cannot give your information to other companies BUT banks can share information within**

Other Tips:

- When you do a BT have the bank wire the funds into your checking account as an ACH (if the same rate applies). NOW, you have the ability to write a personal check to the friendly competitors without you leaving paper trails with the bank. **ACH make sure it goes to another banks checking account**

- If it is at a 0% - take all of it (this will sometime throw off the indicators and make it tougher for the banks algorithms/calculations)

- Try to keep separate credit cards for wife and husband - you can flip back and forth (always use the... why does my wife have a better %?)
**also tougher to keep track - this is another long one... i'll explain later**

The norm for 0% is typically 9 months exceptions:
- Towards the end of Quarters if I as a manger needed to hit my numbers they will be more than willing to give out that longer 0% - just keep in mind - if a CH asked for a 0% for 12 months $5k, they will not get it... compared to a $50k BT
- Ask to see if they have any NEW CARDS with a 12 or 15 months 0% promo... You are not going to apply for a new card BUT "chop" your credit line to the new card (bank term is call a "high-line distribution") - since you are already approved on your current credit line, they will not pull credit report.

**hope that helps...***
Jeff Coga
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Postby sputNick » Tue Oct 21, 2008 7:14 pm

I didn't know you could negotiate.

The rates on my card were voluntarily lowered a little bit and my parents had the same thing happen with their cards but I'm going to seriously look into this and see if I can get them even lower.

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Postby JEFF COGA » Wed Dec 03, 2008 5:26 pm

sputNick wrote:I didn't know you could negotiate.

The rates on my card were voluntarily lowered a little bit and my parents had the same thing happen with their cards but I'm going to seriously look into this and see if I can get them even lower.


2 Reasons why it was lowered...

1. because you probably have small balance with good credit and the c.c. does not want to lose you to a balance transfer to a competitor (ex. They lowered from 15% to 11% WOW it wonderful BUT if you can do a BT for 0% with a competitor even better)

2. because you haven’t used your credit card and they want to entice you…

ALSO watch out for the rate reduction from a fixed to variable... currently the variable rates are much lower than the fixed rates. On paper it will look good but in reality it will not. The feds will jack up the interest rates you will see that variable rate sky rocket.

Jeff
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this may help...

Postby BT1 » Mon Jul 20, 2009 11:31 pm

Credit cards are governed by the contract that you signed when you applied for the account. The contract lays out in detail all the fees and the interest rate that will be charged with respect to the account. It has been my experience that most banks violate the terms of the contract by:

1. Not complying with the Federal Truth in Lending Act and Regulation Z 226 et seq.

2. Charging a "fee" that is not allowed under the express terms of the contract.

#2 creates several problems for the credit card company. The first problem is that by charging a fee not provided for the in terms of the contract the fee will most likely cause the true APR to be higher than the APR stated in the contract. In my state (Georgia) the contract becomes void and the creditor losses the right to any interest on the balance under the state usary law.

And then we have a breach of contract claim. Charging fees against the terms of the written contract gives rise to damages.

Good luck...



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