How to Get a Lower Interest Rate on Your Credit Card

Surprises from credit card companies are fairly common. Surprises that make you smile are not. Would it surprise you to know that you're just a phone call away from a lower rate? It's one of the few times you can have a pleasant conversation with the customer service department of a credit card company. Go on, give it a try.

That's all it took for over half of a U.S. Public Research Group to be granted lower rates. The group was composed of people from all credit backgrounds - it's not necessary that you be a loyal customer of 20 years. Many people are able to lower their rates within a few months of getting their card (if there is a lower rate available - you can't get any better than a zero percent introductory rate). Nor is it vital to have made every payment before the grace period. In this scenario, the company weighs whether you are a customer they would like to keep, period.

It's also worth noting that you don't have to know a secret code or master the art of negotiation before calling. The above-mentioned research group used the following three-line script:

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.

Though this opening is not really aggressive, if you shun any confrontation you can start simpler: Just state your name, that you are a cardholder, and that you are calling to inquire about a rate reduction on your card. Most likely, you will be transferred to an operator who does just that - maybe one who will present the offer as soon as the line connects. That's what I call "No hassle."

In the worst case scenario, you still have your account with the same rate (unless you used the "take my business elsewhere line," in which case you need to be prepared to back it up). Try again in three months. The world of finance is constantly shifting, so it may be feasible for the company at the end of the year when it wasn't this summer. Plus, you can rack up that many more cycles on your payment history.

The bottom line is this: once the credit card company has you as a client, as long as you haven't defaulted and aren't currently overdue, it is much more profitable for them to reduce your rate and keep you as a customer than to lose you to a competitor. If you go elsewhere and pay off your account with the company that refused to lower your rate, they have not only lost all of that interest you would have paid them, but they have also lost a client. If you haven't noticed, getting new clients is a big deal to credit card companies, hence the billions of direct mail pieces, ads and commercials. It takes them so many advertising dollars to get you, so they'll do what they must to keep you.