Did you know that you can negotiate the interest rate on your credit card? Few people are aware that they have rights and negotiating power when it comes to the terms and conditions on their credit card of choice.
Although these are few and far between, and the company can easily deny your request if they want, many people have discovered it is possible to negotiate better interest rates on their credit cards when they put in the work. The interest rate on your credit card is one of the main factors that drive up the cost of your card, so it is necessary to know what it is and how to manage it over time.
Start with Your Current Interest Rate
Because of the importance of interest rates, it might be a good idea to find out what the interest rate is on your credit card and see if you have a chance to lower it. Another thing that people are unaware of is the variability of credit card interest rates. Your credit card company can raise your interest rate whenever they want, and most people are not aware it is even happening. You may have started with one rate, but after having the card for several months of years, your card issuer may have increased that rate without you noticing.
If your rate has gone up, not all hope is lost. The first step you can take when your credit card company increases your interest rate is simply to jump ship – or at least threaten to leave. While this may seem dramatic, it provides an opportunity for the credit card issuer to take note that you are unhappy.
If you notice your credit card company has raised your interest rate, give them a call and tell them that you cannot accept nor afford a rate hike. If the interest rate isn’t brought back down to normal, tell them politely that you will be forced to close the account and transfer the balance elsewhere. The company will likely take your comments into consideration. If they oblige, you’ll have a lower interest rate. If not, you can also look for a balance transfer credit card offer to save on interest rate payments.
Understanding Credit Card Terms
Sometimes, credit cards come with an introductory zero percent APR period where you aren’t charged interest on the balance owed. What many cardholders don’t realize, however, is that once you miss a payment, this deal is canceled. This almost immediately increases your interest rate not to mention comes with a late payment fee, and it can be a costly mistake.
If you miss one of your payments and your interest rate goes up as a penalty, try to make on-time payments from that point on and later ask for the zero APR to be applied to your account again. Your company might say no, but it won’t hurt to at least ask.
Know Your Consumer Rights
There are also consumer protection laws that you can use to your benefit. You have the right to opt-out to certain changes to the terms and conditions of your credit card agreement. By law, your credit card company must give you a 45-day advance warning before your interest rate is increased. Also by law, you have the right to say no to interest rate and fee increases under certain circumstances. Moreover, should your interest rate be increased, you have the right to request that your old interest rate be applied to your old balances.
Final Thoughts on Negotiating Credit Card Interest Rates
Interest rates sometimes rise, and it’s a problem we all have to deal with. But with a bit of information and communication with your credit card company, you have the chance to lower your interest rate or keep it at its previous level. Making a simple phone call to your card issuer could potentially save you thousands in interest rate payments in the long-run.
