I Want to Negotiate Down My Credit Card APR

Alden Wicker

If you’re trying to pay off credit card debt, there’s a big determining factor in how long it can take: It’s the interest rate on your credit cards–otherwise known as the annual percentage rate, or APR.

Let’s say, for example, that you have a credit card with $5,000 on it and an APR of 25%. If you make payments of $300 a month, you’ll end up paying about $1,200 in interest–and it will take 21 months to pay it off. But if you lowered that APR to 15%, you’d pay only $642 in interest over the 19 months that it would take to pay it down. You just saved more than $550! (And, so you know, the faster you pay it off, the less you’ll shell out in interest.)

RELATED: Your Financial Frenemy: Compound Interest

If you currently pay the balance off every month, your APR doesn’t technically matter. But if you lose your job or otherwise find yourself unable to pay the bill one month, you’ll be happy that you negotiated that APR down now.

Unfortunately, lowering your APR isn’t as easy as clicking a button. It involves having a conversation (or a couple) with a representative (or two) from the credit card company. We’ll walk you through the best way to help convince your credit card company that you deserve a lower APR.

Collect offers that other companies mail to you.

Credit card companies aren’t as free and loose as they were before the 2008 recession when it comes to sending out card offers, but you could still get some good solicitations in the mail for cards with lower rates and 0% introductory offers. If you do, save them because they could help make your case later.

Know your rates.

Look for your APR on all of your credit card statements. It’s not easy to find, but trust us, it’s there. Write down:

  • the name of each credit card
  • your APR for every credit card
  • how long you’ve been making on-time payments

Usually, the longer you’ve been with the credit card company, and making good on payments, the better.

Know your credit.

Your credit score helps to determine what kind of APR is possible for you. You can get a ballpark estimate for free without dinging your credit through CreditKarma.com. But if it’s been more than three months since you’ve pulled a credit report, we suggest you do so now–if you have erroneous or bad marks on your credit report, calling to ask for a lower interest rate could call attention to the mistakes, and your credit card company could actually raise your interest rate.

Here’s how to get your credit report. Once you have access to it, promptly dispute any errors and have them taken care of before proceeding with any discussions about lowering your APR.

Check out the competition.

Head over to bankrate.comcreditcard.comcredit.com and lowcards.com to look at what kind of APR you could get from competing credit card companies. That credit score that you pulled above comes in handy here because you’ll see offers that are only available to individuals with excellent credit.

You can also find the average current credit card APR listed on the right-hand side of Bankrate.com. This will give you an idea of whether it’s even reasonable to expect a lower interest rate. (Given that the average “low interest” credit card rate as of this writing is 11%, someone with an APR of 9% already has a great rate. Sorry, Charlie, that’s what you get.)

After collecting this info, along with any paper offers that you receive in the mail, come up with a target rate that you would like to get.

Make the call.

Flip your card over, and dial the number on the back. Ask for the “credit account specialist,” which should help put you in touch with someone who has more power to help you.

Be polite yet firm, and ask open-ended questions instead of any that can be easily answered with a “no.” Case in point: ”Do you think that you can lower my interest rate?”

Consider using this script:

“Hi, my name is _____. I’ve been a good customer of (current credit card company) for (number of years), and I make my payments on time, but my APR is too high. I have offers of (x) from (competing credit card company A), and (y) from (competing credit card company B). I’ve had a good experience with you, but I’m considering switching. I would like to have my APR lowered.” [Note: Ramit Sethi has also gotten good reviews for the script included in his book, which is also available via this $1.99 iPhone app.]

If they offer you just a point lower, but don’t get you to your target rate, say, “Can you do any better?” If it’s the best that they can do, move on to the next step.

Ask to speak with a supervisor.

If step 5 doesn’t work, don’t take it personally. Credit card companies make more money in interest if your APR is higher, so you need to work hard to convince the right person that you should have a lower interest rate.

Politely ask to speak to “someone who could help me with this” or “your supervisor.” If the representative says a supervisor isn’t available or they can’t transfer you, say, “I would like to have your name and your identification number, so I know who I’m speaking with.” This communicates that you are not the kind of customer who gives up easily, and makes them feel accountable for giving you a satisfactory answer. (Also, if you have this information, you can call back later and report your dissatisfaction with how that particular representative handled your account.) Then ask again to speak with the supervisor, stating that you’d prefer to speak to that person now instead of calling back.

Once you have the supervisor on the line, repeat the script in Step 5. If this still doesn’t get you more than a point lower, move on to step 7.

Ask to speak to someone in the retention department.

The job of the retention department is to keep you as a customer. Remember: You probably have a lot of juicy offers in your hand right now, so you could bolt at any time if they can’t help you. With this knowledge, they’ll be incentivized to make you happy.

So repeat the script in step 5. But the difference here is that you’re not merely “considering” switching–you probably will switch, unless they give you a reason to stay.

RELATED: 5 Surprising Things You Should Negotiate

Call back in a week.

If none of the above works, all is not lost. If you call back after a few days, you may get another representative who is better able to help you.

Transfer to another card.

If that still doesn’t work, and you can get a better interest rate elsewhere, take it! If you can get a balance transfer to a card with a 0% introductory rate, that’s ideal–but only if you can pay off your debt before the introductory rate expires because the interest rate could jump to a higher level than what you have now. If you’re worried about paying it off within a set amount of time, you could also go for a credit card that will guarantee you a low rate “for the life of the balance transfer.”

Additionally, watch out for balance transfer fees. While some companies waive such fees, others charge anything from a flat fee (such as $75 per card transferred) to a percentage, like 3% of the amount you’re moving. If you’re going to pay off your credit card within a few months, the savings you’d reap from the lower APR might be lower than what you’d pay to make the transfer.

Once you’ve determined that a transfer will save you money, and you know all of the terms of the transfer, go ahead and switch to a card with a lower interest rate that’s clearly established in the contract. And make sure to read all of the fine print before signing. 

RELATED: 0% Credit Card Offers Gone Wrong: 5 Devastating Mistakes to Avoid

Consider a forbearance plan and/or a debt management plan (A.K.A. credit counseling).

This option is only for those who are genuinely having trouble making minimum payments, and who have a large amount of credit card debt and/or other consumer debt relative to their income. The debt management company will work with the credit card companies to help negotiate lower interest rates, so you can pay off your debt–and possibly streamline it into one monthly payment.

But there are big downsides: Your credit card company could report that you’re in this plan to the bureaus, lowering your credit score. And you might have to close your account while you pay it off. So don’t lie and say that you’re in financial distress when you aren’t.

If you are in serious financial trouble because of a job loss, divorce or high medical bills, it may be worth it to talk to someone at the National Foundation for Credit Counseling (NFCC.org). They have highly trained counselors who can guide you through your options.

Achieving Your Financial Goals

LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc. that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Unless specifically identified as such, the people interviewed in this piece are neither clients, employees nor affiliates of LearnVest Planning Services, and the views expressed are their own. LearnVest Planning Services and any third parties listed in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.