Can You Get Card Companies to Lower APR for You ?

Have you seen the APR on your credit cards increase recently and wondered how to convince your lender to lower the APR?

If the increase in interest rate is due to several late payments you've made, it's doubtful you will be able to convince the lender to reduce the interest rate right away. However, if you have made only one payment late and can explain the reason, you may find your lender willing to discuss the problem.

The Problem

Credit card lenders don't want to lose good customers. You may have used the credit card for years with no problems and no late payments or over limit fees. Then a family emergency or temporary financial problem caused you to make a late payment.

In the past year many consumers have opened credit card bills and found their interest rate increased drastically even though there were no late payments and no reason they could see for the change. In many cases, the increase was so drastic the result was the doubling or even tripling of the monthly payment due.

For a time, a request to the lender that the interest be reduced was met with the standard statement that the account was not eligible for a interest reduction.

This was distressing to many account holders who didn't realize the credit issuing banks were positioning their accounts for new consumer protection laws that were to take effect in early 2010.

Preparation

Be prepared when you call your lender. Have your account number, know how long you've been using the credit card, and be prepared to emphasize your excellent record of payments.

If you had a late payment or two due to a loss of income or medical problem, be ready to explain both the problem and what has been done since to correct the financial aspect of the problem.

Now, do some research online to look for similar credit card offers from other lenders. Look for offers with rates that are similar to what you paid before the APR was raised by your credit issuing bank.

Request a copy of your credit file from the three major credit rating bureaus. One of the most common reasons given for increasing the APR on a credit account is simply "information contained in your credit file".

This stops many consumers as they believe there may be incorrect information in their credit file. By obtaining your file before contacting the credit card company, you are armed with facts and will not accept generic "reasons" for the increase in APR.

The Solution

With all the facts and credit files you've gathered, call your lender and tell the customer service representative you are requesting a reduction in the interest rate on your credit card account. Explain your case calmly and politely by explaining why you believe the interest rate should be lowered.

Now pull out your secret weapon - the other credit cards that are available to you should you decide to cancel this particular account.

When mentioning other potential credit cards it's best to be a bit vague about the interest rate offered by the other lender. The service representative will ask you what the interest rate is on the offer you are thinking about.

Instead of quoting a number, tell the rep you don't remember the exact percentage but it was quite a bit less than what you are being charged by your current credit card lender.

Conclusion

The answer on how to convince your credit lender to lower your APR is simply to present your case well. Get the facts and compare offers available before contacting your credit lender and you may save a significant amount with a reduced APR.

This is very effective if you have paid your account on time yet feel your interest rate is higher than your deserve. If you have one or two late payments and can explain the circumstances, you may still be able to reduce the credit card APR if your payment record with that company has been a good one in the past.

If your interest rate was raised as a result of a number of late payments or an account that hovers right at the limit of credit allowed, you are not likely to have APR lowered immediately.

However, if you begin making the payment on time, paying more than the minimum due each month and reduce your debt well below your credit limit, you can request a change in APR after 6-12 months of a good payment record.