There is no doubt that credit cards are among the most useful and practical financial tools. The benefits they offer, including secure cashless payments and rewards, are plenty. However, they have a drawback: they have high interest rates. These rates can make it difficult to pay off outstanding balances and may lead to long-term debt. Thankfully, credit card rates can be negotiated. With the right approach, individuals can convince the lender to issue a credit card with a low APR.
Approach the Lender of the Longest-Held Card
Individuals have a great chance of negotiating for a lower credit card rate with the lender of their longest-held card. In such cases, they can use their long-standing loyalty to the lender as a strong suit in their negotiations. They can also demonstrate how they have maintained a strong trust over the years with responsible card usage and timely payments. These factors can be presented as valid reasons for deserving a reward in the form of lower interest rates.
Pay Off Outstanding Balance
Those with an outstanding balance on any of their credit cards should pay it off before negotiating the rates for a new one. While it may not be easy or possible, they should try to pay off as much of the balance as possible. This simple step can demonstrate financial responsibility. Lenders are more likely to reduce interest rates on credit cards for those who do not carry high balances, as this minimizes their risk and reflects strong repayment habits.
Prepare for the Meeting
When it comes to discussions about negotiations, it is best not to go unprepared or even underprepared. This tip works just as well for discussions about decreasing the APR of credit cards. Before connecting with the lender, individuals need to arm themselves with all the details and key data. This way, they can be ready to present fact-backed arguments and answers to the questions asked. As a part of the preparations, they should gather essential documents, such as their credit reports and bill payment history. If individuals have offers of low-interest credit cards from other lenders, they must include those as leverage during the negotiation in addition to these documents. Competitive offers might compel the lender to offer a lower interest rate.
Do Not Lie About Credit History
It is no secret that a high credit score, like 700 and above, can easily strengthen an individual’s case, as it shows a disciplined debt repayment history. However, lying about having a high credit score will not work when talking to a lender. In fact, it might worsen their case. Credit card companies and financial institutions can easily access credit history. So, any false claims can quickly be discovered and may damage credibility.
If they have a low credit score, it is recommended that they divert the conversation toward their strengths. For instance, individuals can use a recent income increase or effective debt reduction to build a strong case. It is even better if they take time to pay off their debt, improve their credit score, and apply for a new card. With an improved score, individuals have substantially higher chances of getting low interest rates on the credit card.
Ask to Speak With a Supervisor
An important tip to remember when negotiating credit card interest is knowing who to speak with. Individuals can start talking about the offer with a customer service representative. But if the conversation isn’t going their way, they should ask the representative to connect them with their supervisor. It is usually better to speak with supervisors about reducing interest rates since they have more authority than the representatives to approve such special requests. Upon being connected to the supervisor, individuals can present their case again, but with a more polite tone and comprehensive arguments.
Be Friendly but Assertive
To yield favorable results in any negotiation, individuals must always focus on their tone throughout the conversation. While confidence is key to a fruitful negotiation, individuals must maintain their composure and not become irritable. They must keep in mind that the supervisor at the credit card company, or any points of contact, has the authority to reject requests when spoken to disrespectfully. Keeping a friendly but assertive tone will work in the individual’s favor when talking to them. With a polite tone, they can start putting their case with details about their good credit score, strong repayment history, etc. If the conversation does not lean in their favor, individuals should discuss better offers from other lenders.
Pitch Again
Not losing hope is important even after putting up a strong case. Instead of giving up, consider trying again after three to six months. During this time, individuals can improve their credit scores, reduce outstanding balances, or strengthen their financial profile.