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I’ve been conducting a credit card experiment over the last year and a half. I’ve been carrying a minor balance on a single card, and periodically I call up and ask the company to reduce my interest rate. As of last week, they have now done it three times in a row. Each time I call and ask (in my case, the calls are roughly six months apart), I get another 2-5% rate cut. I went from having a card with a painfully high rate (it’s an Amazon rewards card, if you must know) to one that’s pretty reasonable. My goal is to keep driving the rate down until I hit single digits or the company stops listening to me.
The U.S. Public Interest Research Group did a study in 2002, in which fifty consumers called their credit card companies and requested lower rates. Over half of those who called were rewarded with lower rates, in some cases vastly lower, like cutting the rate in half. (Read more about the study.) The study encouraged consumers to use this simple script when calling the credit card company:
Hi, my name is [Your Name]. I am a good customer, but I have received several offers in the mail from other credit card companies with lower APRs. I want a lower rate on my card, or I will cancel my card and switch companies.
The study also suggested that some bold consumers followed the above script with a request for a 10% drop in interest rate, just to see what would happen — I guess they’re better at haggling than me.
In my case, I just call up and suggest that, gee whiz, I’ve been getting a lot of offers in the mail (which I really don’t, because I opted out years ago), and I’ve got this balance, and sheesh, I’d like to see about getting a lower interest rate so I don’t have to transfer my balance…and voila, they transfer me to someone who is “authorized today only” to give me a lower rate. It’s like magic.
Anyone want to join me in this experiment? I challenge you: call the number on the back of your card, spend a maximum of 5-10 minutes on the call, and see if you don’t get a lower rate.
I love this idea…however, I just recently paid off my credit card (I sent $5 over, just so they’d go away) and I’m terrified to dip my toe back in the credit waters…
posted by donner on 8-10-2007 at 11:57 am
Donner, that’s actually a smarter challenge. I hereby challenge those who don’t get a lower rate to simply pay off the balance and get rid of the card! :)
posted by Higgins on 8-10-2007 at 12:01 pm
I’ve been playing a similar game with my credit card companies (need 2 to make it work) for awhile. I simply juggle any balance from one card to the other depending on the never ending low interest balance transfer offers. Each time a balance is transferred, I call to let them no I am canceling.
Long story short, I don’t think I have paid a rate over 8% in years. In fact, I don’t think I’ve had a balance incurring a rate over 1.9% in over a year.
Bonus points: Try getting them to raise your limit too.
posted by Cheeques on 8-10-2007 at 12:11 pm
I am currently in the process of paying off my credit card debt (3 months until I am clear) and lowering my interest rate would be a great help- I just wish I thought about doing so sooner. As it is I just got 5% knocked of my rate.
posted by Karen on 8-10-2007 at 12:26 pm
This works with AOL too (kinda). If you have AOL and another ISP like Verizon, Optimum Online, Time Warner, whoever, just call AOL and tell them right off the bat you want to cancel. They will transfer you to a special department, whos only job is to get you to stay. When they ask why do you want to cancel tell them you have another ISP so you technically don’t need two. They will lower the price to $12.
posted by Rexmons on 8-10-2007 at 12:29 pm
We have been rocking a 0% interest rate on one of our cards for almost three years now. It was one of those “until October!” deals and when October rolled around, we called and did the whole “got another offer” song and dance, so they extended the 0% for a YEAR. We’ve done that twice now. Periodically, they raise the limit, too, so it’s all becoming quite ridiculous.
posted by Rachel on 8-10-2007 at 12:47 pm
It worked! Lowered by 3 percentage points. Works for me. Thanks for the tip!
posted by Gina Beirne on 8-10-2007 at 12:56 pm
I called and asked just to have the balance reduced one day last month. They saw that I was a long time customer with an excellent payment history, a low balance, and a HIGH available balance. They dropped by more than 10% without batting an eye.
Just call and ask. They will work with you.
posted by Thaylok on 8-10-2007 at 1:02 pm
I got one to go down almost 14% with one phone call. Awesome.
posted by Eric on 8-10-2007 at 1:11 pm
29% interest rate!!! (I pay it off every month, so I didn’t really know.)
I asked and they said no. Offered me home equity loan however. Chase Visa.
$29,000 available credit.
posted by GoingLikeSixty on 8-10-2007 at 1:21 pm
Rexmons -
You still pay for AOL? They’ve been offering it for free for quite some time. Basically, they are switching from a subscriber based revenue model to an advertiser based one and they’ll do almost anything to get you to keep using them. All you have to do is call them up and tell them you want Free AOL and you want to keep your existing Screen Name(s) (email addresses). See www.free.aol.com as well. You keep everything (except for 24 hour free support for morons) and they stop billing you.
As for the credit cards, I can’t even tell you what my supposed interest rates are. If you pay it off every month when the bill comes, you get 28 days of interest free buying. Go with the card that gives you the best freebies or cash back. Just pay your bill every month!
posted by Sid Morrison on 8-10-2007 at 1:23 pm
I don’t carry a balance on my cards and I usually pay on time. But for those times when I just couldn’t pay on time,
I’ve called credit card companies to ask them to remove the late charges (sometimes mine have been ~$50) - It has worked every time!
posted by Michelle on 8-10-2007 at 1:45 pm
I’m with donner & Higgins, but have to add that getting rid of a credit card can make life pretty difficult these days, what with ordering online and whatnot. Years ago (like when we got our first joint account) my wife and decided that we would work hard to avoid carrying a balance on the card and pay it off every month. Basically, we don’t buy anything on the card that we can’t pay for. I’m happy to brag that we’ve never paid a dime in interest to our credit card co.
In fact, we’ve got a great card through our credit union that gives a kickback (something like .04 percent) on all our purchases. Not much, but it’s better than a poke in the eye with a sharp stick (which is akin to paying 29% interest.) That works great when I make large purchases for work & get reimbursed. We’ve also bought a couple of cars using that card just for the rebate — one we had the cash banked to pay for it, and the other we took out a standard auto loan to pay off the higher-interest card debt.
Credit cards are like any other tool; they can be used properly and be a huge benefit, or they can be misused & cause huge problems.
posted by Dave on 8-10-2007 at 2:58 pm
I got a pretty good credit lecture as a young adult from my father. He let me in no this secret when I was about 17.
So for over 10 years I have been doing this same exact thing. Yes there is a point when they will not lower your credit rate anymore but thats usually after you get it below 9%.
Basically every year you are entitled to certain privileges as a customer of their credit service. You may get your interest rate reduced, credit limit increased, and even a late fee removed as often as once a year. So technically you don’t have to tell them about other offers unless you feel your rate is really high and you do have a competitive card brochure in hand.
Also, you don’t even need to carry a balance on it at all times for this to work. Just being a long time member that is loyal and uses the card occasionally works wonders. And if you always pay off balances on time then your credit will continue to get better.
Paying a sum off over a period of several months is often better for your credit history as well. It shows that you paid on time for those months which boosts your credit score. Paying them off in full is good too but if you need to improve a credit score its better to pay on time for a long period of time.
posted by Michael on 8-10-2007 at 4:02 pm
It seems there are lots of negotiable rates. I learned that from my son-in-law’s mother. She pays lower than the going rate for cable TV, cable internet, the LA Times, and just about anything else. I tried it with my DSL after the introductory price for a year expired. I am saving $30/month over their regular rate.
What was that old saw about the squeaky wheel?
posted by Barbara on 8-10-2007 at 7:54 pm
I have no idea what my interest rate is, because I pay off the balance every month. But get rid of the card? Are you kidding? I get ff miles and reward points for using it!
posted by Miss Cellania on 8-10-2007 at 10:29 pm
I agree that getting rid of the card is a bad idea even if it has a high interest rate. Credit history determines your credit score obviously so keeping a card open for a long period of time and being on time with payments is the key to success. I wouldn’t suggest having cards from retail stores or an excess amount of credit cards. But 3-5 cards with no balances on them and a long credit history will make your credit score A+.
posted by Michael on 8-11-2007 at 10:43 am
I called my 2. 1 lowered it .1% (yes, point one percent) and the other by 2%. Guess which one I’m stopping using.
posted by Jean on 8-11-2007 at 10:00 pm
Oh, I still HAVE my card…just cause I’ve paid it off, doesn’t mean I’ve cancelled it…I prefer to use it in emergencies when travelling, or when my cat breaks his leg and needs costly repairs…I don’t mind putting small amts on it, but I will admit that its nice to have it paid off…being completely debt free is liberating…
posted by donner on 8-12-2007 at 11:33 am
I just tried calling my card company to get my rate lowered and even with the script and sweetness in my voice, I was rejected. I’m carrying $1800 at 11%; I think I’m just going to switch cards.
posted by Lily on 8-14-2007 at 9:16 am
On all of my credit cards, I have a 3.49% interest rate, so I am definately keeping this company. :-D
posted by Kiara on 8-14-2007 at 1:24 pm
capital one visa switched me from ~19% to ~14%
discover presented me with 2 options: promo 3.9% on purchases made the next 6 months OR a new 14.9% rate (down from 18.9%) which would also affect my current balance
after the giggly woman chatted with me about the weather & restaurants, i chose the latter, since i’m only charging ~$100-200 per month AND i just opened a card with a 0% intro rate
the life of a completely-broke recent college grad is a great one. i long for the days where my expenses were as limited as my income, & i was able to pay off my small balance every month, so it didnt matter that my interest rates were high.
i’m 23. i got my first credit card at 17. i didnt carry a balance until age 21. my main purchases are gas & automotive. awesome. i always pay on time, though — &, thanks to this article, i will be making the same phone calls again in a few months, making the same requests
posted by sd on 9-11-2007 at 11:19 am
It Worked!! I’ve tried in the past, with various other credit cards, to get them to lower my rate and it NEVER worked. I opened this time w/ the script you mention and voila - DONE. I was on the phone less than 10 minutes! they lowered my rate to 9% - SINGLE DIGITS - and got them to remove a late fee i had been disputing unsecessfully before (it was one day late, and they charged me $39.00)! The funny thing is how they laid on the charm so thickly. Began telling me how good a customer I am and how they appreciate me, etc. Complete differnt experience than ever before. Really felt like I was in control for once.
posted by ines on 9-12-2007 at 9:27 am
So is it better to pay your cards off in full each month or carry a balance? I would think creditors like to see that that they can make money on you from charging interest on balances, not that you pay them off completely and they get nothing from you for using their card. Plus your debt management payment history is more revealing if you pay down something as opposed to using the card for cash substitution I would think. That’s only true if you don’t carry a high balance of course. I don’t know the answer but if paying in full is just as good as carrying a balance I will charge no more than 10% of my new card limit each month and pay it off completely. Hopefully in one year I’ll have some good history to show.
posted by Max on 9-17-2007 at 7:31 am
Chase and Washington Mutual won’t budge. Not even with the threat of transferring balances! I guess they don’t care about losing a customer. But then again, why would they? I’m one in a hundred million!
posted by Adam on 12-17-2007 at 3:12 pm
I just paid off a card with Chase at an orginal balance of $1900 interest rate of 12%. After the grace period of 6 months my interest rate defaulted to 26%. I called to request a lower interest rate and was denied. Bastards.
posted by Christopher on 1-25-2008 at 4:00 pm