Say this, save money: negotiating credit card interest rates

Ever hear the myth of Sisyphus – the Greek figure condemned to push a boulder up a hill forever? If you’ve tried to keep clean floors with pets around or paid off credit card debt with high interest rates, you get the metaphor.

Gratefully, manageable interest rates don’t have to be a myth.  It really can sometimes be as straightforward as talking with your creditor to request a better rate.  

When to ask

There are two common scenarios when it’s worth asking for a rate reconsideration:

  1. Your credit score has improved.  While the creditor is not obligated to lower your rate, you can put yourself in the best place possible.  Borrowers who are lower risk (aka, higher scores) tend to get lower rates.
  2. You are experiencing financial hardship.  Not all creditors have hardship rates, but some may offer a temporary or permanent reduction rather than see you default.

What to do before you call

  • Gather your information.  Know your current APR (“annual percentage rate” or interest rate) and your payment history.
  • If possible, research other credit offers so that you know the current rates for your score range. Keep copies of “preapproved” offers from emails or paper mailings, for example (but don’t actually apply for now, as inquiries can lower your score.)

Sample phone script

Here’s a sample phone or email script you can tailor to your situation:

“Hi!  My name is (X) and I’ve been a customer with you for about 4 years.  I’m calling to ask if you can lower my interest rate on my credit card.”

(Wait for a response. If they ask why:)

“I’ve been making consistent on-time payments, and have been watching my credit score go up.  I’ve begun to notice other cards offering lower rates.  I’d really rather stay with your company if there’s any way to lower my APR.”

(Or if you’re experiencing hardship:)

“I’m trying hard to stay on top of my payments, but my hours have been cut at work, and so my budget is very tight.  A lower rate and payment would help me keep up with payments and avoid falling behind.”

(If they say “no”:)

“I understand. Is there a supervisor I could speak with about this?  Or is there a timeline when I might qualify for a better rate in the future?”

(If they say “yes”:)

“Thank you so much!  Can you confirm the new rate and when it goes into effect?  May I get something in writing for my records?”

What to do after the call

  • Keep notes of who you talked with, the date and time, and what was discussed.  File the notes (whether handwritten or electronic) somewhere safe, along with a copy of any documentation they send regarding the new rate.
  • Follow up if you don’t receive any promised documentation within a few weeks.
  • If they were not able to lower the rate, make a note on your calendar to contact them again in 3-6 months to check if your credit score has improved further.

Extra tips to consider

  • Be courteous but direct. You’re asking them to reduce their overall profit, but it’s mutually beneficial if they can keep you as a customer long-term.
  • If you have received (or window-shopped) offers with lower APRs or long promotional periods, mention them and ask if it’s possible to at least match the permanent interest rate on the other card. 
  • For comparison, current average rates are around 20%, so if your rates are significantly above that, it’s more likely that you will have success, assuming you have a strong credit record.

While contacting a creditor may seem daunting, a few minutes of time may save years of payments and thousands of dollars in interest.  

✅Action item: Create your own version of the script above in preparation for your call and rehearse a few times in preparation, if it helps!  Debt can feel like trying to roll a boulder up a hill—but each action you take gets you closer to the peak. Make the call and reclaim control over your financial future.