Ask for a lower APR; you just might get one


Opening Credits
Columnist Erica Sandberg
Erica Sandberg is a prominent personal finance authority and author of "Expecting Money: The Essential Financial Plan for New and Growing Families." She writes "Opening Credits," a weekly reader Q&A column about issues for people who are new to credit, for

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Question Dear Opening Credits,
When is it possible to get a lower interest rate, and do creditors ever raise the interest rate if the person is not in default? – Joseph


Dear Joseph,
So you want a better APR? Great! Have a long and responsible history with the account in question and make sure your credit scores are impressive.

According to a 2016 poll, most who ask for better card terms receive them, but very few even bother to ask. So the odds are in your favor, provided you have a good score, a solid payment record and are in overall good standing with your issuer.

It’s also important to know that as a result of the passage of the Credit Card Accountability Responsiblity and Disclosure (CARD) Act of 2009, cardholders are protected from sudden or retroactive interest rate hikes without being given a 45-day notice. Cardholders have the right to opt out of changes to their card’s terms and have at least five years to pay off any remaining balance under the card’s original terms, but the account will no longer be active.

Rates may still go up even if you’re not in default, but only under limited circumstances, such you when you fall into default, or when a promotional period is over. You will hear a lot more in the coming months of one additional allowed rate increase: Fed rate hikes. They can be passed through under the law, so if your card is a variable-rate card (most are) when the Fed increases rates, your card’s APR will most likely increase in tandem. 

The law also created a mechanism for lowering your interest rate. If you got hit by a penalty rate for paying late, six consecutive on-time payments should trigger a review. 

So, you first you need to know where you stand before you call your issuer to request a lower APR. Review your past statements to see your payment record. To get your FICO score, visit the company’s website. Each credit report (TransUnion, Experian and Equifax) sells its own score, and they’re about $20 per report, though some credit card companies offer free FICO scores to their cardholders. As for VantageScores, they are free though various providers, including

Once you’ve checked your credit scores, you’ll have a decent idea of how current and prospective creditors will perceive you. If your scores are in the good-to-excellent range (700 and above) and you appear to be a creditworthy individual, you can use that status to your advantage. Give the issuer a call and ask if you qualify for a lower rate based on your credit scores. If you’ve always paid on time and have kept the balance low, mention that. Most credit cards advertise a range of interest rates for new applicants. Check out your card’s APR range online to compare your current APR and to get an idea of how low the issuer can go with its APR.

In the event you’re denied, consider applying for a balance transfer card. Although there is usually a fee of 3 percent of the amount you shift over, many issuers waive interest altogether for over a year. The interest rate after that may be less than what you may have now, too. If a balance transfer card interests you, review the many offers available, then decide on one you most want and probably qualify for before applying. You don’t want a bunch of unnecessary inquiries on your credit report, as they will negatively impact your scores.

If you’re not appealing to credit card issuers because your rating is low at the moment, give yourself a credit score makeover. All credit scores are developed from the data listed on your credit reports, so ensure that your information is attractive:

  • Send all payments by or before due dates.
  • Slash your debt. Aim for zero, but if you can reduce it to less than 30 percent of your credit limit, that will help.
  • Don’t apply for credit products until your scores are where you want them to be.

By following this simple plan, you should see major improvement in six months to a year.

Mind that you can always charge without any interest fees being applied to the purchase. Just use the card and pay in full when the bill is due. If you don’t roll balances over to the next month, it won’t matter what the card’s interest rate is. You’ll enjoy a short-term loan with a guaranteed 0 percent APR. Another benefit: Your credit scores will naturally rise, making you more eligible for the very best rates on other credit products.

See related: Script to ask for a lower credit card rate, 12 consumer protections in the Credit CARD Act

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Published: October 12, 2016

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Updated: 10-26-2016

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