Can I get my credit card to lower my APR?
February 18, 2016 9:36 AM   Subscribe

I have a credit card that I've been paying off for the last three years and have not been making any new purchases on because of the high APR (19.9%). Every year they have increased my total credit limit, which is now at $17,500. I have a balance of $1600 on the card (which I plan on paying off completely with my tax return). My FICO credit score is 762. I'm planning on calling them to try and negotiate a lower APR but I had a few questions I was hoping you could help me with.

1) Should I wait to negotiate the lower APR until after I have paid off the balance?
2) Will the fact that I have not charged anything to the card in the last three years impact my chance at having my APR lowered? I haven't been using this card because of the high interest rate, and have used a different card with a lower rate instead.
3) What can I do to maximize the chance they will lower the rate? I'd like them to lower it to 10%, but I feel like that might not be reasonable. Should I ask for that and hope to meet in the middle?
4) Would I be better off just canceling the card? I'd like to have as little debt as possible, and I'm making some strides toward that goal, but my partner is out of work and it's been helpful in the short term to have some credit available.
posted by anonymous to Work & Money (10 answers total) 3 users marked this as a favorite
I haven't been using this card because of the high interest rate
You should tell them that. Specifically say that you would start using it more if the interest rate was lower. Tell them you have another card and if they can beat the rate on it, you will use this card.
posted by soelo at 9:43 AM on February 18, 2016 [9 favorites]

4) Would I be better off just canceling the card?

Do not do this. It's there contributing to your credit history and overall available credit; both length of credit lines and credit utilization contribute to your credit score.

Call them, explain that you'd be using the card if the rate were lower, and ask them to lower the rate. If they offer you a number, great, and if not then hey, ask for what you want. Also, if they've been raising your limit for you every year, you probably qualify for a much higher limit, which you can also ask them to raise for you if you'd like.
posted by phunniemee at 9:49 AM on February 18, 2016 [4 favorites]

It has been my experience that the relevant criteria for lowering your card's rate is your payment history. If you have paid on time for the last 6 months, I think they will lower it.
posted by AugustWest at 9:52 AM on February 18, 2016

There is literally no downside to asking for a lower rate. The worst they will do is say no.
posted by FencingGal at 10:03 AM on February 18, 2016 [1 favorite]

Listen to phunniemee; don't cancel the card! After payment history Credit Utilization Ratio is the next biggest factor in your credit score. If you cancel the card, you'll erase $15K of "unutilized" credit from the calculation. You'll also harm the age of credit component of your score.

Just call them and ask. The worst they'll say is "no," and in the meanwhile, you're mere weeks away from erasing the balance on that account altogether -- great!
posted by notyou at 10:06 AM on February 18, 2016

Right now you're paying about $26.50 in interest every month on your balance of $1600. If you pay it off in a month or two as planned the savings from a lower rate are measured in the tens of dollars, which is worth a phone call to me, anyway. If, going forward, you don't carry a balance on the credit card, you don't need to worry about lowering the interest rate, as you won't be charged interest.

If you do want/need to run a balance, banks often offer a low-interest card with an annual fee. Provided you're running a balance, the total interest + annual fee can be significantly less than the interest on a high-rate card.

Personal lines of credit are another option: they have low (and negotiable) interest rates but charge that interest as soon as you borrow money on it, unlike a credit card where you are only charged interest on the balance you carry at the end of the billing cycle.

(based on my experiences as a customer in the Canadian banking environment - YMMV elsewhere)
posted by cardboard at 11:41 AM on February 18, 2016

Another option is simply to open a different credit card with a similar or larger limit but much better terms, and cancel this one. Sometimes even the same bank that refuses to improve the terms on a current card will issue you a new card with better terms.
posted by slkinsey at 11:51 AM on February 18, 2016 [1 favorite]

IME they won't lower the interest rate while there is an outstanding balance; I had pretty much the same situation (~2k debt, atrocious interest rate from when I was 18 and first got the card, 775 credit score) and was denied. But once I paid it down and applied for a different card I was given a lower rate.
posted by celtalitha at 1:05 PM on February 18, 2016

Can you find a card to do a balance transfer to? You second card may already have this option. But generally, banks seem to give the best products to new customers, so do a bit of comparison shopping.
posted by kjs4 at 7:28 PM on February 18, 2016

With a FICO of 762, certainly some bank will deem you worthy of a 0% interest rate card, even if it's introductory for 15 months or something. This list from NerdWallet looks like a good place to start looking.
posted by jabes at 10:51 AM on February 19, 2016

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