Lowering Your Credit Card Interest Rates

Tom Fragala   

A discussion with credit and identity security expert, Tom Fragala, on lowering interest rates on your credit cards. Can a simple phone call save you money?

Transcript

John: Welcome to the CreditFYI Café. It's probably no surprise that understanding the vast world of credit reports — not to mention personal finance, identity theft and other related issues — can be tough going. We understand that, and we're here to help you figure it all out. Our weekly podcast, the CreditFYI Café, is the perfect tool to enable you to start taking control of your credit. And here, you'll get a chance to do just that; you can listen to and learn from our handpicked team of credit, identity and financial experts. They've got answers to the questions you want — and need — to know.

I'm John Fischer, and again I'd like to welcome you. What you learn here can go a long way toward deciphering the complex world of credit reports, scores, identity theft services and more. So put your "credit" hat on; it's time to enjoy the very first CreditFYI Café!

We'll kick things off by talking about simple money-saving technique — one that might allow you to save on credit card bills. Hopefully, that got your attention. I mean who doesn't want to save money on their monthly bills? So here's a question: What if you learned that lowering your credit card interest rate was only a phone call away? Before you answer, remember the simple fact is that unless you pay off your credit card balance every month, you're going to pay a finance charge. And since credit card interest rates can be 20% (or higher), finance charges can take a big bite out of your monthly budget.

According to our guest, credit and identity expert, Tom Fragala, lowering your monthly credit card fees may be as easy as asking for a lower interest rate on your credit card.

Welcome to the CreditFYI Café, Tom.

Tom: Thanks for having me, John.

John: So, Tom. We've got a couple of questions for you today. Why don't we start off, let's say, bottom line, what can you do to lower your credit card interest rate, reduce your monthly finance charges? Is it really as easy as asking for a lower rate?

Tom: Well the good new is, John, it certainly could be.

You have an agreement with your credit card company on the annual percentage rate on your credit card. And it's possible if you contact them to get that rate lowered. And the end result would be to reduce your monthly finance charges.

John: I see, but why would a credit card issuer just lower my interest rate? Isn't it a bit more complicated than that?

Tom: Well, it's pretty simple, really. They might lower your interest rate if they want to keep you as a customer. There's a lot of competition in the credit market and if you're a good customer, meaning you've been paying your bills pretty regularly and you have a pretty good credit history, then they might just do it: They don’t have to do it — by law — but if you contact them, then I'd say you have a pretty good shot at getting a lower interest rate.

John: That's good to know. So, let's say — hypothetical situation here, Tom — I get my credit card issuer on the phone, then what? What's my magical argument to — what do I say, exactly?

Tom: Well, the key thing to focus on is the reasons why they might lower your interest rate. So if you're, you just get across that you're a good customer and been around for a while and you've paid your bills on time, especially in the last six months — meaning you've paid at least the minimum on your statement and you have a pretty good credit score — credit rating — then what you do is you just give them a call on the customer service line and just spend a minute or two explaining your situation. So what I might recommend is you be very polite and non-threatening, and, and, but firm and say "I've been a customer for a while, I pay my bills and I have pretty good credit. I've gotten lots of offers from other credit card companies with lower interest rates. So, I'd like to get a lower APR on my card with you … or I may find myself to consider switching to another credit card company. What can you do to help me out?"

John: So you're — just on one level, you're more likely to get further with sugar than vinegar, shall we say?

Tom: That's right, because — keep in mind — the customer service reps take a lot of calls from disgruntled customers. And you're probably getting yourself a better shot at getting to a good decision if you're polite. Also, they're more likely to, you known hand you off to the supervisor — if they, if they feel like you might be a good candidate for that. So, they'll probably look at your records online in their system and then— make a decision either right there, or they may say "I, I can't do anything for you." And then your next step would be — well, could you put me in touch with someone there who can make that decision?

John: Okay, so it's a, it's appropriate for me to, to speak with whoever I, I get initially and then if — for whatever reason — if I feel I need to make that move, opting to speak with a supervisor — probably a wise move?

Tom: I would say so, yes.

John: As you mentioned, Tom, it may seem obvious, but what's, can you describe briefly, what's the big advantage of a low APR?

Tom: Well, yeah, you're right. It might be pretty obvious that a lower annual percentage rate on your credit card means if you keep a balance on your card, you're gonna pay less out of your pocket in finance charges. It just means more cash to your bottom line. But even if you pay your balances every month, you might think, "Well, I don't need to worry about this." But let's say you accidentally have a late payment, and you just so happen to have a high balance — like you forgot or it got lost in the mail — then in that situation, you'd be paying less of a penalty, simply because you made a mistake. So I think it's, it's a good idea to take some time to get a lower APR.

John: So, Tom. Ask and ye may receive a reduced interest rate on your credit cards. Thanks for stopping by the CreditFYI Café. We'll talk with you again.

Tom: Thanks, John; great to be here.

John: Did you know that U.S consumer revolving debt — those are debts that have no fixed payments, and it's a term that's used primarily to measure credit card debt — those debts ballooned to an all-time high during 2007? Guess how high those numbers got? Stay tuned for the answer in our next CreditFYI podcast. In the meantime, we'd love to hear what you think. So the next time you've got credit-related, financial and ID theft-oriented questions, just send us an e-mail to: creditfyicafe@creditfyi.com. And we may use one of your questions on the air. Please send your thoughts and questions; we're counting on you.

Until then, remember that the biggest factor in controlling your credit destiny … is you.