How to Lower Your Credit Card Interest Rates

I wanted to title this piece, “Lessons from someone who has 50+ credit cards, a great credit score, and hasn’t paid interest on a credit card balance in fifteen years.” But since that’s a little long, I’ll stick with the shorter title.

Scott Bilker, talking his way out of debt

This article is an excerpt from a recent interview with Scott Bilker, founder of DebtSmart.com. He is the author of several books, including one of my favorites, “Talk Your Way Out of Credit Card Debt.” Scott joined me on Talk Credit Radio to share his strategies for getting your card issuers to lower your interest rate or waive fees waived. Here is an excerpt from that interview, edited slightly for clarity:

Gerri:    Scott, you know, I think there’s a sense these days that sometimes people feel lucky they even have a credit card and have a credit line. So really, what are issuers willing to do now in terms of negotiating with customers?

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Scott:    Well, you know, it’s still true that banks need profitable customers to be profitable. So as consumers, we do hold the cards so to speak because we decide where we spend out money. And even if interest rates aren’t the best for banks, they still make money by charging merchant’s fees.

Gerri:    There are a lot people that are still paying pretty hefty interest rates, given the fact that these banks are paying practically nothing to borrow this money.

Scott:    Yeah, that’s absolutely true. It’s not like the banks are going to lower the interest rates just because they’re getting a better deal. The only time banks are going to give out really good rates are to credit cardholders who have excellent credit scores and have had a relationship with the bank for years.

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Gerri:    For a long time, there was no downside to asking for a lower rate. Then we went through a period about I’d say, 2009, when it actually got a little bit risky because sometimes it would trigger an account review and (your issuer) would say, “Oh gee, well you have a lot of credit card debt, we’d like to lower your credit limit,” and that lowers your score and when your score goes down your other (credit lines may) get lowered. So tell me, where are we and where have we been in this process?

Scott:    Well you’re absolutely right, it might’ve been a little riskier before but if you’re paying high rates and if you’re getting gouged for a lot of fees, it’s important to stop that. So it’s always important to call the banks and try to negotiate better rates and have fees waived.

Today, you know, the swing is now towards more credit card usage in the last few months. There had been many reports that people are now using their credit cards more, certainly during this holiday season. So once again, the banks have to decide if they’re going to give good deals to people or if they’re going to let people just transfer the balances or use (other) cards during the season.

Gerri:    Okay, so let’s talk about what you do if you feel that your credit card rate is too high. What do you think is too high these days?

Scott:    You know, anything you’re paying is too high.  Unless it’s zero. Just look at your credit card statement right now, whatever it is, if it’s not zero you want to try to get towards zero, I mean, zero is perfect. I gotta tell you, I haven’t paid any interests for like, 15 years already. I mean zero, absolutely nothing.

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Gerri:    Tell me what your credit score is. It has to be pretty good.

Scott:    It’s 790. It’s been better. Yesterday it was 790, but the best it’s ever been is 819.

Gerri:    That’s out of 850 on a FICO score, so that’s still a prime credit score.

Scott:    Yeah it’s a good score. Anything over 720 is quite good and you know, I’ve got 50 credit cards. I used to have like 60 but a whole bunch of them got lost during that credit crunch.

Gerri:    Okay, I want to talk about that a little bit later on the show. But let’s start with what to do when you talk to your credit card companies. So we’ve talked about the fact that you do want to negotiate if you’re paying more than 0%. You get on the phone, you’re a little bit nervous, what do you say to them?

Scott:    That’s exactly why I wrote my book (Talk Your Way Out of Credit Card Debt). Just for a moment about the book because its important: the reason why I did this is for that very reason. People are nervous, they don’t know what to say, so what I did was I recorded the banks. You know, how when you call the banks they record us for training purposes? Well I recorded them for training purposes, to train everyone on how to deal with the banks. So the book has a whole bunch of calls—the actual transcripts from the calls. In the book I have 52 but I’ve made hundreds. I just picked the ones that would represent the basic outcome that you would have.

So I would say that, you know, if you’re nervous about calling there are many things you can do, but you should always call. There’s nothing to be nervous about. Just pick up the phone, give them a call and the very first person, let’s say for example we’re going to, let’s say, do something easy like waive a late fee. That’s pretty easy to do.

If you have a late fee, call your bank, get that thing waived especially if it’s your first one. Just call up, talk to the first person: Hey, I was looking at my credit card statement, I noticed this late fee, can you waive that fee for me? And I have never heard of a case for a first-time late fee when they didn’t waive the fee. They always waive that fee no matter what, throughout the years, they always do it.

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How to Lower Your Credit Card Interest Rates (cont.) »

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Tagged as: credit cards, credit negotiation, interest rates

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Gerri Detweiler Gerri Detweiler is Credit.com's Director of Consumer Education. She focuses on helping people understand their credit and debt, and writes about those issues, as well as financial legislation, budgeting, debt recovery and savings strategies. She is also the co-author of Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights, and Reduce Stress: Real-Life Solutions for Solving Your Credit Crisis as well as host of TalkCreditRadio.com.