With so many credit card companies raising rates and lower and credit limits, it may seem impossible for you to negotiate for better terms. However, you might be able to get the credit card companies to see things your way if you have an excellent payment history. While these negotiation tips won’t necessarily work for everyone, if you already have a decent credit score and you’ve been a customer for several years, you may want to give it a try.
1. Be Informed – review the rates and balances on your other credit cards. Is this new limit or rate increase out of line with what other companies are offering? If so, you may have a stronger case when it’s time to negotiate. If you don’t have any other cards, do some research to find out the going interest rates for credit cards that are similar to the one you already have. What you shouldn’t do is apply for several new credit cards at once, as this will lower your scores.
2. Don’t Delay – contact the credit card company as soon as you find out that your rate or credit limit is being changed. Because of the new consumer protection laws, you should have 45 days to review these new terms. You’ll have more time to negotiate a more favorable outcome if you work with the credit card company from the beginning.
3. Speak with Management – in general, customer service representatives may not have the ability to alter the new terms on your card. Ask to speak with a manager, and then politely make your case. If you have been a good customer, and are otherwise creditworthy, speaking with a manager may be the only step you need to take.
4. Ask for a Compromise – you may be able to get your credit card company to reinstate your prior interest rate, or your prior credit limit but not both. Decide which one is most important to you and your current credit score. For instance, a low interest rate may be better for you if you have a large balance to pay off whereas a higher credit limit may be what you’re after if you carry a low balance and want to improve your available credit ratios.
5. Inquire about Other Options – sometimes credit card companies may be willing to offer your old rate on a different card that has fewer rewards or perks. If you are willing to switch, be sure to ask if this is an option. You may also be able to negotiate a more favorable rate if you are willing to open a secured credit card. However, if you open a new account to transfer the balance, be aware that your past credit history on the prior account will not be carried over to the new one.
You always have the option to cancel the card and pay off the balance underneath the old credit terms, a move which most credit card companies will want to avoid if you’ve been a good customer. Negotiating a more favorable rate can help you to keep your payments manageable while the account remains open to give your scores a boost. However, if the new rates are going to make it impossible for you to afford the payments, the best advice is to close the account. Missed payments will harm your credit far worse than a single closed account.