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.
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