The One Hour Project: Reduce The Interest Rate On Your Credit Cards

This post is part of The One Hour Project, in which you can spend just one hour to put your finances in a better place without a big lifestyle change, through frugality or other financial choices.

This is something that’s well worth doing if you have consistently carried a credit card balance in the past and have never requested a rate reduction. It takes a bit of time (about an hour for a small pile of cards), but it can really save you some serious money in the long run. It’s pretty easy, too, as long as you’re willing to be a bit forceful over the telephone.

First, get out every credit card you have on which you have carried a balance in the last year. By “carry a balance” I mean you’ve not paid it off entirely and let the balance carry forward, earning interest. If you haven’t carried a balance in a while, the chance that they’ll reduce your rate is much lower because you’re not a client that makes them money.

Once you have these credit cards in hand, flip them over and call the phone number on the back. Punch whatever buttons you need to push to get to a human representative, then ask to speak to a supervisor. Most first-level people you speak to on the phone have no authority to raise your rate, so you must speak to a supervisor. If they won’t let you, tell them you are considering cancelling your card.

When you have a supervisor on the phone, request the rate reduction. Most of the time, they’ll just go ahead and reduce your rate; if not, tell them that you are considering transferring your balance (of course, this assumes you’re carrying one) to a low-interest credit card offering a 0% interest rate – this will often get the company to reduce your rate. If even this doesn’t work, suggest that you are having difficulty making the payments, which will often convince them. If these three tactics don’t work, politely say thank you and hang up.

Then, rinse and repeat for your other cards. Likely, the majority of these cards will wind up with some kind of rate reduction, and every one of these reductions will end up saving you money. Let’s say you have a card with a $2,000 balance that’s currently at 18.9% and you get the rate reduced to 12.9% – that’s a savings of $120 over the course of a year just from one phone call. With the average American credit card carrying household having a balance approaching $10,000, such an effort for an hour can save a lot of cash over the long haul.

If you enjoyed reading this, sign up for free updates!

Loading Disqus Comments ...
Loading Facebook Comments ...
  1. benp says:

    If you haven’t carried a balance in a while, the chance that they’ll reduce your rate is much lower because you’re not a client that makes them money.

    I have no experience, but can’t the logic run the other way? If you don’t carry a balance, then your interest rate doesn’t matter – to you or them. So if you haven’t carried a balance in the past and call them up to ask them to reduce your rate it makes it sound like your wanting to put large balance on card and start making the credit card company a lot of money. I never carry a balance, and I get 0%* balance transfer offers all the time, which is effectively offering to lower my rate even though I don’t carry my balance. Those 0% transfers have some gotchas, so maybe that what makes it worth the Credit card companies while.

  2. kelly says:

    I’m curious about tips for exactly how to request the rate reduction. Just come right out and say, “I’d like to have my rate reduced?” What’s the best way to approach the conversation?

  3. M. Smith says:

    We tried this yesterday and I wish I’d seen this post first.

    We have 5 cards and have not carried any balance on them for over a year – one is used rarely and always paid in full each month. We don’t plan on using the cards, we just wanted to lower the rates ‘just in case’.

    3 cards did reduce our rate, and two flat out refused, stating they had no better offer for us (nothing better than 14.74% ?!!?).

    We did not ask to speak to a supervisor, we did not threaten to cancel the card, there was no balance to threaten to transfer or to claim to have difficulty being able to make payments upon.

    I am not happy with the reduced rates we received by calling. Most of the cards were at around 20% and the lowest reduction we received was to 15.99%. Our FICO score is around 740, no late payments, negatives, etc. Doesn’t seem right.

  4. FIRE Finance says:

    This is a great idea, just one phone call can save us tonnes of money. Also, if we get the rate reduced on the card we do not have to pay the balance transfer fees (in case we wanted to transfer the balance to a lower APR card). But we do not agree about the fact that an average American credit card (household) having a debt of around $10000. We covered this issue in details in our post at: http://firefinance.blogspot.com/2007/08/lies-about-credit-card-debts.html
    According the studies, the average American household credit card debt is some where around $2200 to $2500.
    Cheers,
    FIRE Finance

  5. Dough Roller says:

    This post points out the benefits of requesting a lower interest rate, which credit card companies are often willing to accommodate. I did the same thing with my home equity line of credit.

    I am troubled, however, by the following: “If even this doesn’t work, suggest that you are having difficulty making the payments, which will often convince them.” Trent, by this did you mean that one should suggest they are having trouble making their payments, even if this is untrue?

  6. Andrew Stevens says:

    M. Smith, may I recommend applying for a new card and canceling the other cards (except the oldest and perhaps the one with the lowest rate)? While you might not be able to get a rate reduction on the ones you have, you can certainly get a better rate than 14.74% with a FICO of 740. Since you’re only looking for the rate reduction “just in case” and aren’t carrying any balances, it should be no problem to cancel the lousy cards and get a better primary card. My FICO score isn’t a lot better than yours and my card is about 10% (and I could have done even better, but I went with a cash-back card instead of a super low-rate card).

  7. DJ says:

    Sigh.

    I have read many posts about this and I have tried SEVERAL TIMES to get Bank of America to reduce the 16.75% interest rate on a card I’ve had for four years. They too have told me they have nothing better to offer me because they dont have anything better to offer at the time and I don’t use the card that often (as in never since I used it in March and previously before that in January). My balance on the card is about $2500 of educational fees.

    My fico score is 720.

    Advice anyone?

  8. Woody says:

    @DJ: Get another card and transfer it!

    I found, like DJ, that some may not be willing to reduce your rate for current charges, but did offer an incentive 6-month rate for transfers. The trick I played was to have 2 of 3 cards totally clean at any given time. Since transfer values would last about 6 months, and the time between mailed “low rate transfer” offers was about a year, that worked out well. Every 6 months I’d transfer it to the oldest empty card to avoid the erupting non-promo rate on the current one.

    There are two important rules to this though:

    1> Do it on the phone and ask them to waive the transfer fee. Most charge %1 to %3 up front with a reasonable cap (about $50). If they won’t, be sure to figure that in, and make sure its worth it (If you’re shaving >4% off the annual rate on a large sum, it usually is…). Be especially careful if the rates are close, and you think you can pay it off within the time period.

    2> Make sure you pay off the other card entirely with the transfer so you can chain it back to that one in a year or so when the other rates expire. By then the other bank will be missing your interest income and should be willing to strike a deal on a lower rate, just as the others are expiring.

    By “card hopping” your debt you can keep the interest charges low for quite a while, making it easier to finally pay off.

  9. Fee says:

    I have tried this several times, have asked to speak to a supervisor, spoken to a supervisor, and they have not budged. They say my income to debt ratio is too bad. Bank of America is especially awful. I have said I’d have no choice but to go with another bank and they have said fine. I also have higher debt and higher rates that the people here. Thanks for writing this post, and congratulations on your baby girl! I hope she and your wife are doing well as I write this!

  10. Stephanie says:

    Hi-I’d like to share my experience with this strategy. When I called in to Discover and Juniper, they gladly lowered my APR (one by 7%!). Bank of America was another story. After the initial teaser of 0%, my rate went to 13% (not too bad). However, within two months I received a notice that it would be bumped to 23.99%!! I called and asked them if they would keep my lower interest as I have never missed a payment (on any bill). As ‘fee’ wrote, they claimed that my debt-to-income ratio was too high (alright, they got me there). I called another time and told them that I would have trouble paying down the balance. The customer service reps are completely useless (what a clever business tactic, BofA!) One rep told me, “call back when you have a zero balance.” Has anyone had any luck with this company? Thanks for the great articles!

  11. doug m says:

    i tried to do this with my discover card and all they said was if i wanted to transfer to another card that i should go ahead and do it because they weren’t going to move my rate. c’est la vie

  12. kim says:

    Wow. I’m amazed at the amount of double-digit interest rates I’m seeing here. I haven’t been paying anything over 7.9% for almost 5 years now. I “card-hop,” as well. Don’t forget to check credit unions. We needed (i.e. suddenly leaking profusely after almost 20 years)a new roof two months ago, and I was able to get a 3.99% rate from GTE CU. Just keep at them. And ask, ask, ask!

  13. Tristan says:

    Don’t buy things you can’t afford. Don’t use credit cards and you never have to pay interest. Then it’s a moot point. Or, keep your credit score up by using the card but paying it in full a few days after you charge something.

  14. Fee says:

    Tristan, yes you are so right. But I am not at that point yet. I am obviously in a very very different place from most if not all of you on this site. From this point forward I can refuse to not buy what I can’t afford. I actually have not used any credit card except for AmEx, which I have to pay back in full each month, for several years. But I have huge debts from old charges, and huge interest rates. I haven’t paid late in about a year and that’s not good enough for the banks. They don’t like my debt to income ratio. I should probably not clutter up this site with my posts because I truly feel like a fish out of water. But I do admire those of you who are at the point of having no balances, etc. Someday I hope to join your ranks!

  15. Erin says:

    I just called about my 2 Bank of America cards. They responded in a very scripted fashion, like they are receiving many of these calls. They did agree to reduce my interest rates, however they did not sound like they were taking “my personal situation” into account. HOWEVER, they did say that if I was late or went over limit on either card, the rates would increase to a much higher rate, one as high as 32%! I did accept the lower interest rate, but I am very concerned about getting trapped in further credit card debt.

  16. Mr. Frugal says:

    I’m always amazed at what a difference a few percentage points makes when it comes to paying off debt. When combined with paying a few extra dollars each month, the debt can disappear much quicker.

  17. Lisa says:

    Chase has had me at a 29.95% “variable” rate for three years now and they refuse to lower it. One rep even told me, “I advise you to just pay off the card and close the account. Your rate will not change no matter how many times you try.”
    After reading the comments here and doing research on Google, I found out why credit card companies are so arrogant.

    ConsumersUnion.org website tells us why.

    The banks/credit card issuers CONTROL the regulators (Federal Reserve Board & Office of the Comptroller of the Currency (OCC)) who are supposed to protect both the bank and the consumers.

    “The OCC is not funded by Congressional appropriations, but by asset-based assessments on its regulated entities. In 2005, 97% of its (OCC) operations were funded by revenue from assessments. The agency uses a size-based assessment scale, which makes it especially dependent on a few large banks. In one recent year, for instance, the equivalent of 10% of the OCC’s budget ($40M) came from one bank alone.”

    “…the OCC has not initiated a public enforcement order against any of the eight largest national banks for violating consumer credit laws since early 1995.”

    “The 20 biggest national banks account for nearly three-fifths of those assessments.”

    “Findings made during compliance examinations are strictly confidential and are not made available to the public except at the OCC’s discretion.”

  18. brk says:

    Fee, I hope you are still reading this! Most of us had to learn the hard way how to get (and stay!) out of debt. Between my husband and I, we had almost 50K in debt after college. A very large chunk of that was student loans, but there was significant cc debt as well. So hang in there! Don’t feel like a fish out of water because most of us have been there at one time or another.

    People who say “Simple. Just don’t get into debt, then you won’t have to worry about the high interest rates” have obviously NEVER been in the situation I used to be in (or you are in now).

    If you can manage to knock out a couple smaller cards, sometimes that helps to generate some lower APR offers from other companies. The only other advice I have is to not talk to the first people on the phone–always (*only*) speak to a manager or supervisor. Have you tried going in to your bank for a personal/debt consolidation loan? Look nice, act confident, and tell them exactly what your goals are. You might be surprised what they can do for you.

    If all else fails, just remember that you ARE making progress, even if it’s slower than you’d like. Hang in there :-)

  19. Chris says:

    I’m a college student who is constantly looking for ways to be more frugal (taking the bus, avoiding unnecessary purchases etc.) and I love reading this blog. Anyways, I just got off the phone with Citibank about reducing the APR on my two credit cards (I use the cards often but every month I have no issues paying off usually at least 1/3 of the total balance on each card.) After speaking to the supervisor (she was very polite and helpful by the way) I was able to reduce one card from the APR from 17.74 –> 12.74 and the other card from 18.24 –> 13.15. I don’t know if y’all would consider that a good reduction or not but I am just happy I read this and used the information to call. I honestly thought they would just tell me no after all of the other stories on here but the people from Citi Bank were polite and helpful (I’ve had positive experiences with them before so I guess I’m not that surprised.)

  20. Maura says:

    Don’t forget to try credit unions. Sometimes they have lower rates, and you may get to speak with a real person at a local branch.

    Also, see firefinance’s comments about the average amount of credit card debt and Liz Pulliam Weston’s article on msn money “The big lie about credit card debt”. According to her, the methodology used to come up with the average amount of credit card debt of almost $10,000 was flawed. The method used ignored everyone with no credit card debt, included business credit card debt, and was not adjusted for payments in the mail. The average credit card debt is about $2500, with a large percentage of people having no debt or paying off their balances every month, and less that 10% of household carrying $10,000 or more in credit card debt. And the small number of people with $50,000 or more in credit card debt inflate the averages.

    So if you have a lot of credit card debt, please don’t use these statistics to reassure yourself that it is nomal. It isn’t, and you will never get ahead if you keep carrying a large balance on your credit cards.

  21. I think many consumers can save more with 0% balance transfers than by calling their companies and requesting a rate reduction. However, this is good advice for people who can’t get approved for new credit card that offers a 0% APR on balance transfers.

    This is a great article. Look forward to hearing more on the subject.

  22. workingmywayup.com says:

    I wrote about how to do this and also included a fantastic script to use when calling the credit card companies. It tells you word for word on how to lower your APR and also increase your credit limit(which increases your debt to credit limit ratio thus increasing your credit score [hypothetically]). Besides this is so easy that anyone can do it, so there is no reason not to do it!

    It also gives you a good worksheet to fill out while doing it so you can track the changes in the credit limit and APR for each of your credit cards.

    Anyways you can check it out at workingmywayup.com also a direct link to the post is http://workingmywayup.com/2008/02/raise-credit-limit-lower-apr/

    Anyways keep up the great work trent! I am so happy that I stumbled across your site!

  23. Alan says:

    To all those with Bank of America horror stories, it goes far beyond credit card situations. I just want to point out to everyone they are some hard-nosed players at Bank of America that will call your every bluff and play you like a fiddle. Beware!!

    Just my personal opinion of course. Great article with some excellent informative comments, thanks for sharing everybody.

  24. oftherock says:

    Great post.

    However this does not work in the Philippines.
    I tried and told them that I am having difficulty making the payments.

    The answer I got was “but yours is not a delinquent account…”

    I need help paying all of these credit cards. I will be reading your blog often.

  25. alvin says:

    I tried calling Bank of America to have my rates reduced. NO LUCK.
    Never mind the fact that BoA has been begging the government to hand them taxpayers’ money.
    Two other credit cards have actually raised my rates despite the fact that I’m never late with my payments.

  26. william says:

    I’m from Australia and I thought I’d give this a go. While they were unable to reduce my interest rates, they did waive my annual fee of $55! I personally could never make $55 in 5mins for anything else… And it’s better than a punch to the throat! Thanks! FYI – I’m with St George Bank.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>