Poll: Asking for better credit card terms pays off
Few ask, but those who do usually get rates lowered, late fees waived
By Martin Merzer | Published: September 24, 2014
Ask and you (very likely) will receive. That is the rule of thumb for credit card customers seeking an interest rate reduction or trying to reverse a late payment fee, according to a new survey by CreditCards.com.
The survey of 983 credit card holders found that relatively few ask for better treatment, but those who do usually succeed:
- Just 23 percent say they have asked for a lower interest rate. Of those who asked, about two out of three (65 percent) report they got a rate reduction.
- Similarly, only 28 percent have asked for a late payment fee waiver. Cardholders who sought forgiveness were granted it six out of seven times -- an 86 percent success ratio.
The take-away lesson: Asking for better treatment from your card issuer is probably worth the effort.
"A lot of people who've had accounts for a long time have probably earned a better rate than they're getting due to establishing a good credit history, but the creditors won't check unless the cardholder calls and asks," said Melinda Opperman, senior vice president of community outreach at Springboard Nonprofit Consumer Credit Management Inc., a nationwide credit counseling organization.
"In many cases, when those requests occur, the creditor will run a credit check before adjusting one's interest rate," she said. "If their credit scores justify setting a new, lower rate, the creditor will grant it."
There's no harm whatsoever in seeking reversal of a late payment fee, she and other credit counselors said. But they recommend a measure of caution and a dollop of research when it comes to requesting a lower interest rate. Be sure you're on reasonably solid ground creditwise before you look for that favor from your card issuer.
"Some creditors will simply grant a new rate based on your credit activity with the account in question," Opperman said. "In those cases, there's no harm in asking for a better rate, and it's definitely worth the time to call and ask.
"Some creditors will treat your request as an application for new credit," she said. "In these cases, if your credit score is much better now than when you first got your credit card account, you should have a good shot at getting a better rate. But be aware that the new credit check may count as a hard inquiry and affect your credit score."
Martin Lynch, director of education of the Cambridge Credit Counseling Corp. of Massachusetts, recommends that -- just to be on the safe side -- credit card holders engage in a field test before asking for an interest rate reduction.
"They could simply ask what the issuer's policy is before a reduction would be approved, rather than make a formal request," he said.
The CreditCards.com survey, conducted by landline and cellphone, found that:
- Twenty-eight percent of all credit card holders have requested reversal of at least one late payment fee. The request was granted to 24 percent of all credit card holders and denied to the other 4 percent.
- People between the ages of 30 and 64 are more likely than others to seek a lowered rate or forgiveness of a late fee -- and they are far more likely than younger or older cardholders to have the request granted. For example, one of every three cardholders between 30 and 64 years old has asked for a fee waiver and they were nearly eight times more likely to get it than to have the request rejected. Twenty percent of those between 18 and 29 years old and 18 percent of those 65 or older sought a fee waiver, but only 16 percent of the younger cardholders and 13 percent of the older cardholders were successful. The outcome was similar for requests for lowered rates: The 30-64 age cohort asks more often, and is successful more often.
- Interest rate reductions produce longer-term benefits to cardholders, but are sought at a somewhat lower level of frequency. The CreditCards.com survey found that 23 percent of all holders of major credit cards have requested lower interest rates. Fifteen percent of all credit card holders were granted reduced rates, with the other 8 percent receiving rejections of their requests. That means two out of three who asked for a reduced rate got one.
- Women (24 percent) are somewhat more likely to seek interest rate reductions than men (21 percent), though the difference is within the poll's margin of error.
- For both late payment fee waivers and interest rate reductions, Midwesterners are the least likely Americans to seek better treatment, but far more likely to receive it.
- Income and education were both correlated with success. For example, credit card customers who report they earn more than $75,000, and those who say they graduated from college, asked for and received interest rate reductions at a higher rate than other customers.
Unemployment no barrier
Employment status is of little consequence when it comes to late payment waivers. They are granted at similar rates to those employed full time (27 percent have received them), part time (21 percent) or not at all (also 21 percent.)
Experts said they were not surprised by the consideration given to the unemployed or underemployed.
At a time of relatively high unemployment, credit card issuers are motivated to help their customers avoid bankruptcy and keep paying off their cards, even at lower interest rates and with the occasionally forgiven late payment fee. In addition, competition is a strong factor here -- regardless of employment status.
"There's a real risk for them in not granting a new, lower rate, since the cardholder could easily apply for a new card from a different creditor, get a better rate and transfer their balances," Opperman said. "Creditors are smart enough to know if there's potential to lose a good customer, granting a rate reduction makes sense."
Video: Negotiating a lower credit card interest rate
The experts' advice: If you think you have a case, call your card issuer and make the request. The CreditCards.com survey shows that the odds are in your favor.
"There's no way anyone will get a lower rate unless they call and ask," Opperman said. "Creditors don't routinely check credit scores looking to grant customers lower rates."
Said Lynch: "If a consumer has a good record of on-time payments, it's OK to make the call."
The survey was conducted by Princeton Survey Research Associates International for CreditCards.com from July 17 to 20 and from July 24 to 27. It contacted a representative sample of 1,497 adults, 983 of whom had a major credit card, defined as a card from American Express, Visa, MasterCard or Discover.
Telephone interviews were conducted by landline (749) and cellphone (748, including 421 without a landline phone). The margin of sampling error for the complete set of weighted data is ± 2.9 percentage points, and ± 3.7 percentage points for cardholders.
See related: Script for asking for a reduced interest rate
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