If high fees on your credit card are getting you down, a simple call to your bank may ease the burden.
That’s according to a recent survey by CreditCards.com, a website that allows consumers to compare credit card offerings. The website surveyed just under 1,000 people and discovered that among those who called the bank to dispute a late fee, 90 percent got the fee waived. Yet only 28 percent of credit card holders in the U.S. actually made the call to ask for the fee to be waived.
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The “just ask” strategy also seems to work if you think the interest rate you are being charged on your credit card is too high. According to the survey, more than 60 percent of those who asked for a lower interest rate were approved. But here again, few consumers—just 23 percent of those taking the survey—said they have asked their bank to lower the rate.
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The results show that banks are becoming a little more flexible, but consumers don’t realize it yet. Part of the reason people don’t bother to contact the bank is because they have little faith that the banks will actually help, says Matt Schulz, a senior industry analyst at CreditCards.com. They remember the recession, when banks hiked their interest rates and cut credit card limits. But as the economy has improved, so too have delinquency and default rates. Schultz says this is one reason credit card issuers are now more open to granting requests for lower rates and to waive late fees. As people spend more, pay off their bills, and become more financially stable, banks are increasingly willing to give cardholders a break. That’s something that consumers can use to their benefit. “People often don’t think of just asking the credit card company to be forgiven,” Schulz said. “They end up losing a lot of money they could otherwise put in their savings account.”
How much? The average late payment fee is $25 for first time offenders, according to the U.S. Consumer Financial Protection Bureau. After that, it goes up to $35 for a second violation within the next six months.
Cutting the interest rate can make a big difference as well. If you have a balance of $5,000 on your credit card and a 20 percent APR, you can save $2,496 over the life of the debt by cutting the APR to 15 percent even if you only make a 3 percent minimum payment. Of course, the banks won’t honor every request to lower rates and waive fees. In general, it seems the wealthier you are, the more likely you are to have success. In households with annual incomes over $75,000, 72 percent of people who asked had their rates cut by some amount, according to the survey. That compared with 55 percent of those in households earning between $50,000 and $75,000. And 93 percent of people in higher-earning households had their late fees removed, while only 84 percent of those earning between $50,000 and $74,999 did. Being older helps too. Among those 50 to 64 years old, 79 percent had their lower-interest rate request approved, but the number dropped among 30 to 39 years olds to 59 percent; for 18 to 29 year olds, it fell to 33 percent.
If you want to lower your interest rate, first find out what other credit card companies are charging. Armed with that data, call your credit card company and tell the rep you speak with that you qualify for credit cards with lower rates and ask them to reduce yours. If they don’t, ask if they have other credit card products that offer lower rates. If you are trying to get a late fee waived, make sure you are not consistently paying your bill late. If you are, there is a little reason for them to waive the fee. If you are not a habitual late payer, pay off the balance on the card before calling.—Nikhil Hutheesing (@Nikhil212 on Twitter)
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