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The Secret to a Lower Credit Card APR


Do you have a credit card that raised your interest rate within the last year? You’re not alone. Credit card companies raised nearly everybody’s APRs because as of this month, the CARD Act prohibits them from doing so again without jumping through a lot of hoops.

But once your credit card raises your APR, how can you get it to go down again? You can always apply for a new credit card with a lower rate, but you need good credit, you may not want another credit card, yadda yadda.

Wouldn’t it be nice if you your existing company would lower your APR on the card you already have? It can be done.

Two Steps to a Lower APR

Step one? Ask.

Your credit card company certainly isn’t going to lower your rate on its own. A large percent of card users won’t complain about their APR (and yet another percentage won’t even know what their APR is—scary!) So your card issuer will assume if they don’t hear from you, they’re getting away with it. So call them up and let them know that your new rate is pissing you off. Explain that you’ve been a loyal customer and rarely or never missed a payment (it will help if these are true). Threaten to stop using the card and take your business elsewhere.

It may work, it may not. If it doesn’t, I give you part two: Ask again.

Yes, part of the secret to a lower credit card APR is asking, but the bigger secret is persistence. The squeaky wheel really does get the grease. Your credit card company most likely documents every call they have with you, including every time you call to bitch about your APR. Call different operators. Ask to talk to a supervisor. Write a letter. Sooner or later, somebody will see that you mean business.

A Reader’s Example

A reader recently opened his Blue from American Express bill to see that his bank’s online payment reached his account a day late. In addition to a $29 late fee, he noticed that American Express hiked his APR from 15.24% to the default rate of 27.7% for 12 months. (The CARD Act now prohibits credit cards from raising your APR unless you are 60 days late, but they snuck this in under the deadline).

As he carries a balance on this card, he grew concerned.

So he called to politely say: “Gee, it looked like I was only a day late because my bank took an extra day to post this payment. I’ve never missed a payment before and I have good credit. Can you forgive this fee and rate hike this once?”

Years ago, I had done this with different credit card companies and they all forgave the fees and rate hikes with one phone call. Unfortunately, our reader wasn’t so fortunate. He spoke with three reps including a supervisor who all gave him the same line: “We’re sorry, but…”

Most people would give up, but this reader decided to try one more time and wrote Amex an email through his secure online communication center. This is what he wrote:

I would like to offer my sincere thanks to the representatives with whom I spoke on Tuesday regarding my increased APR. As I understand, their limited powers were not able to assist me with the dilemma I am facing.

Currently, I am aware that my APR was increased to the default rate due to a late payment for the OCT2009 statement. This payment was delayed due to the timing of the due date, 30OCT, and the processing time that my credit union had allowed for the withdrawal from my account. The payment was processed on 2NOV and noted on 3NOV. Being an independent contractor who is fighting for my own payments, I can understand a company’s need for stringent policies regarding payments. However, increasing my APR by over 10% due to a payment that was 1 business day behind makes me question American Expresses’ goals when it comes to customer service.

I understand that a letter was sent, however being an e-customer I have not expected mail from AmEx for over a year. I understand this will be reset after 12 months, but how am I supposed to remain a customer to a company that has treated me so poorly? If my APR cannot be reduced, I will be forced to seek another company with which I will do business. Please reconsider the decision to increase by APR to the default rate, and I will be more than happy to continue my time with American Express. Thank you.

And the response he received from American Express:

In your recent e-mail to us, you requested a lower interest rate. We have reviewed your account and determined that your current Annual Percentage Rates (APR) were as follows:

  • Purchases: Prime (3.25%) plus 23.99%, currently 27.24%
  • Cash Advances: Prime (3.25%) plus 23.99%, currently 27.24%

Because you are a valued Cardmember, we have reduced your Annual Percentage Rate(s) to the following:

  • Purchases: Prime (3.25%) plus 11.99%, currently 15.24%
  • Cash Advances: Prime (3.25%) plus 21.99%, currently 25.24%

This change will be reflected on an upcoming statement. Please keep in mind that interest rates are subject to change, according to the terms and conditions of your Cardmember Agreement.

It was a pleasure to assist you and if there is any other way in which we may be of assistance, please contact us. We appreciate your Membership and look forward to serving you in the future.

Not everybody will have such luck asking for a lower credit card APR, but the secret is you have to ask and you have to be persistent! It worked for this reader; hopefully it will work for you.

Have you been successful in negotiating a lower interest rate? How did you do it? Let us know in a comment.

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.

Comments

  1. This is a great story, I wrote about doing the same thing recently with bank overdraft fees.

    Personally, I’ve never had to go as far as to write a letter, but now the rules are changing!

  2. Another technique you can use, is to call the credit card company and ask for a hardship program. Let them know you are experiencing financial hardship and they will usually lower your APR for 6 -12 months..enough time to allow you to shop around for another card. I did this with Amex. :)

  3. If you’re going to threaten (however lightly) to close your account, be prepared to actually do so. Credit card companies are taking a hit, even beginning to charge annual fees on cards that previously had none. Consumers are charging/spending less, so not only are card companies losing out on interest income charged to the customer but also on fees charged to merchants who accept credit cards. Card companies may not be as willing to budge as they previously were.

    There are still credit cards out there offering no interest on balance transfers for up to 12 months. Another option is the good ol’ no interest balance transfer technique.

  4. There is no doubt that you can get a lower rate if you follow these steps. Just make sure that you follow through. You can get a lower rate but you will have to work for it. It just comes down to how bad you want it.

  5. monica rider says:

    need information on lower apr’s on my credit cards

  6. The CARD Act doesn’t say credit card company’s are unable to increase your APR if you’re more than 60 days late. They can, in fact, give you a written notice if you are 1-59 days late letting you know that the APR on future purchases (after a specified date) will be increased-so the late payment would not affect the current balance but purchases going forward. Facts are important. Especially when giving advice. Try to give the correct ones.

  7. I just literally called and asked Discover to give me a lower APR. They happily said, “Sure!” without asking questions. I went from 19.24% to 15.24% just that easily. (They also offered a promotion instead of 1% for six months, but I opted for the 15.24% instead.)

    I can’t believe how simple it was. You’re right about them getting away with it just because people don’t bother to ask.