Nearly 8 in 10 credit card holders who asked their credit card issuer for a lower interest rate had their request granted.
Yes, you read that right.
If you’re unhappy with how high your card’s APR is and you’re willing to pick up the phone and ask for a reduction, your chance of success is 79 percent, according to a recent survey from CreditCards.com. When it comes to getting the bank to waive a late payment fee, your chances are even better — about 90 percent.
Those are pretty good odds, huh? If chances of winning a lottery or a sweepstakes were that high, you’d enter every single time, wouldn’t you? Of course, you would. Who’s going to turn down free money?
Well, it turns out, lots of Americans are essentially doing just that. The aforementioned survey showed that only about 1 in every 5 American credit cardholders has ever asked to have a late payment fee waived or an interest rate lowered. That means an awful lot of people are paying more interest and more late fees than they need to.
How much? The typical late payment fee is $38, but the savings from a reduced APR can be far greater. Say you have a $5,000 balance on a card and you pay $150 each month. If the card’s APR is 15 percent, you’ll pay more than $850 less in interest than you would if your APR was 20 percent.
So why aren’t more people asking for these breaks?
Some people never need to. If you always pay on time, there’s no need to ask for a waiver. And if you always pay off your balance in full each month, there’s no need to ask for a lower APR because it never comes into play. Many, many cardholders do both of those things.
Many people don’t think they’ll get them. The numbers prove otherwise, however. And while having great credit and a long track record with the bank you’re asking the favor of will certainly help your cause, the truth is that your chances of success are better than you’d think, regardless of where you are in the credit spectrum — especially when you’re asking for a late payment to be waived. (Pro tip: Don’t ask too often, though. You probably won’t get your way if you’re asking for the fourth time in a year.)
Many people don’t know how to do it. This is a big one. So many of us aren’t comfortable negotiating or asking for things that we’ll avoid having to do so, even if it costs us money in the long run. It doesn’t need to be a scary process, though. In fact, when it comes to requesting a late payment waiver, you likely just need to ask. Many issuers have policies — informal or otherwise — that they’ll waive an occasional late payment fee if you just ask.
Interest rate negotiations can be less straightforward. However, with a bit of forethought and planning, you can take much of the mystery and confusion out of it.
Here are a few tips to help in your negotiations.
1. Pick up the phone. Even though there are plenty of ways to contact your issuer these days — email, Twitter, live chats and so on — this negotiation is probably still best done the old-fashioned way.
2. Be persistent, but don’t be a jerk. Even if you’re upset with the bank because of your late fee or your exorbitant interest rate, don’t take it out on the customer service reps on the phone. They’re just doing their job. Instead, be polite, direct and clear in what you’re asking for, and if that customer service rep doesn’t grant your request, don’t be afraid to ask to speak to his or her manager.
3. Come armed with offers. If you’ve got good credit, chances are you’ve gotten several offers from credit card companies lately. Keep them and use them to help get a lower interest rate on your current card. You can also shop around online to see what offers you might qualify for. Those offers can set the baseline for your negotiations. For example, “I’ve been a good customer for several years, but my APR is at 20 percent. Lately, I’ve gotten some offers in the mail for cards with a 15 percent APR. Would you be able to match that rate on my current card?”
4. Temper your expectations. Don’t expect to go from a 24 percent rate to a 12 percent rate with one phone call, especially if you’ve got less than perfect credit. However, it’s perfectly reasonable to shoot for a 3 to 5 percent reduction, and even that amount can make a significant difference if you carry a balance.
5. Be willing to walk. Ultimately, this is where your true power comes from. Today’s credit card marketplace is incredibly competitive, and banks are pulling out all the stops to attract new customers and keep current ones. That gives you an immense amount of leverage. Again, don’t be a jerk about it, but be clear that if they can’t match the lower APR offer that you’ve found, you’ll leave. (“I really like your card, but the truth is that I’ll probably change cards if you can’t match this offer. I carry a balance and just can’t justify paying that higher interest rate.”)
You’ve got much, much more power in your relationship with your credit card issuer than you think you do. You just need to be willing to use it. If you are, it can end up saving you a lot of money.
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Almost 8 in 10 Cardholders Who Try This Money-Saving Move Are Successful originally appeared on usnews.com
