How to Ask for a Lower Credit Card Rate

Being a good credit card customer ain't what it used to be.

Paying on time and paying more than the minimum aren't necessarily enough to stave off annual percentage rate increases or credit limit decreases, forcing some cardholders with sterling payment histories into an unfamiliar position: negotiating with their credit card issuers to keep the favorable terms they had, or to get a lower rate because of their good behavior.

The Credit CARD Act of 2009 limits the ability of card issuers to set "risk-based pricing," meaning that as of February 2010, credit card companies can no longer raise customers' rates at will. Since they can't charge those customers more, "the only way to make up for that potential loss is to charge everyone a little bit more," says Peter Garuccio, a spokesman for the American Bankers Association.

"Some customers who fall into the 'good' category get swept up," he says.

So how do you keep what's happening to everyone from happening to you? Should you receive the dreaded rate hike announcement in the mail -- and you are opening mail from your card issuer, aren't you? -- take action quickly. Customers who use their cards after receiving notification of the new terms are bound by them.

"A lot of the model that people are working on is that you're going to sit there and take it," says Joe Ridout, spokesman for Consumer Action, a nonprofit consumer protection group.

But don't take action so quickly that you're still spitting nails when you dial your card company's 800 number. While there's no magic phrase to persuade a credit card company to reinstate your previous credit agreement or lower your rate, civility is critical. Remember, Ridout says you don't have a right to a lower rate or higher credit limit. You are asking for a favor.

The first step is to make sure you know your own credit history and credit score, said Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling. If you've been a good customer, be prepared to demonstrate it by laying out how long you've had the card, how much you charge each month and your history of timely payments.

"It's your money, and it's worth fighting for," Cunningham said. "I would definitely bother to make the call."

For those who may be wondering what to say, here's an example of an effective conversation between a credit goody-two-shoes and his or her card company.It's written for those who have had their rates hiked, but with a little modification, it can also be used to simply ask for a lower rate.

YOU: Hello. My name is ____, and I've been a (name of card issuer) customer for (number) years.

The company recently informed me it was planning to change the terms of my credit agreement. I feel I've been a good customer over the years, and I'd like to keep doing business with you, so I'd like to talk with someone about that.

CUSTOMER SERVICE REPRESENTATIVE: Sure. I can help you with that.

YOU: Well, could you first tell me why the terms of my card were changed?

CSR: We're changing our business model due to the current economic times.

YOU: I'd like to restore the terms I had. Is that something you have the authority to do?

CSR: That's not going to be possible.

YOU: All the same, I'd still like to talk with someone about it. Do you have the authority to make that change?

CSR: No.

YOU: In that case, could I please speak with a supervisor?

CSR: Just a moment. (The Eagles begin to play, periodically interrupted by a soulless voice that encourages you to please hold just a little bit longer.)


YOU: Hi, my name is _____, and I'm interested in talking with someone about having the previous terms on my account reinstated. May I ask whom I'm speaking with?

S: This is Jerry.

YOU: And Jerry, what's your last name and direct telephone number?

S: Jerry Smith, and I'm at (extension).

YOU: Thank you, Jerry. Here's why I feel my old terms should be reinstated. (Lay out your case for why you're a good customer.)

From here, the conversation could go several ways. If they agree to everything you want, say thank you, ask for written notification of the reinstatement and the date you should expect to receive it, hang up and do a victory dance. If not, know in advance where you want to compromise.

YOU: Well, even if you can't lower my APR and my monthly minimum payment, can you at least restore the APR?

S: Well, let me see what we can do for you. (More classic rock.) Yes, we could do that.

If they refuse to restore your old terms and it makes financial sense for you, move to cancel the card.

YOU: I'd hoped we'd be able to reach an agreement on this, but if you really can't restore my old terms, then I'd like to exercise the opt-out clause. I want to close the account and finish paying off my balance under the old terms.

S: All right. I'll make that notation on your account.

YOU: I'd also like to receive written notification that I've opted out. Can you tell me when I should expect to receive it?

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