8 ways to negotiate better credit card fees, interest and debt

Erica Sandberg
Personal Finance Writer
Consumer finance expert, author and “Opening Credits” columnist.

Credit card issuers aren’t quite as rigid in applying fees and rules as many consumers believe, savvy cardholders and industry insiders say. Under certain circumstances and with the right approach, cardholders may be able to have their interest rates, account fees or even their balances lowered.

In fact, a 2017 survey conducted by CreditCards.com found that most who asked for better credit card terms got them. That includes 69 percent of those who asked their issuer for an interest rate reduction received it, and 82 percent were able to get their annual fee waived or reduced. 

However, credit card agreements are legally binding contracts, so be prepared to make a compelling case when asking for a compromise. Issuers are under no legal obligation to bend the rules on what they can rightfully enforce, but depending on your approach and situation, your card issuer might be open to a bit of bargaining.

Here are eight credit card negotiation tips from the experts:

8 tips to persuade an issuer to cut fees, interest and debt

  1. Stress the temporary nature of your need. Issuers are more amenable to change terms for a fixed period of time.
  2. Suggest a sensible debt settlement. Have a dollar figure in mind and have the cash ready to send.
  3. Appeal to the powerful. Don’t be afraid to ask to speak to a manager.
  4. Know your card tricks. Avoid an annual fee by trading down to a fee-free card from the same issuer.
  5. Bring up balance transfer offers. Have some on hand when negotiating for a lesser APR.
  6. Discuss a credit counseling plan. See if your issuer will match what they offer.
  7. Make yourself hard to resist. Card issuers don’t want to lose good customers.
  8. Prepare to walk. Don't threaten an action you’re not prepared to take.

1. If negotiating over debt, stress the temporary nature of your need.

Before Bruce McClary was vice president of communications for the National Foundation for Credit Counseling, he worked in various credit card companies’ debt collection departments. There he discovered that people who were in desperate but temporary financial situations could persuade their card issuers to reduce finance charges by asking for a hardship plan.

“Customers would call and ask about options,” says McClary. “We had them, but people have to be specific about what they want.”

For example, he says, explain that you would like your card issuers assistance for a fixed number of months. If not being charged interest until March will help you get back on track, ask for it.

If you want half a year with no payments at all so you can secure employment after being laid off from your job, say so.

You may have to meet in the middle, but most card issuers will give you some kind of a short-term account alteration, McClary says.

2. Suggest a sensible debt settlement.

As with collection agencies, some credit card issuers will strike a deal on the amount of debt that you owe.

Nate Masterson, director of finance for Maple Holistics, says he has offered lump sums to credit card issuers in the past and they’ve been accepted. How? By showing them the money.

“You have to have the funds available,” says Masterson, who says to start by offering that figure. “Good old-fashioned haggling can go quite a long way given that you have a good case to make.”

To increase the potential of an issuer agreeing to a settlement, calculate the amount you’ve already paid in accumulated fees and prepare to point that out.

For example, if your current balance is $5,000, but over the lifespan of the account you’ve paid thousands of dollars in interest, you may want to offer $3,000 today to call it even. With a large and lingering obligation, the card issuer may consider you a liability, so it might be a relief to get the cash.

Creditors and debt collectors who agree to accept at least $600 less than the original balance are required to file IRS 1099-C forms with the IRS, as well as send debtors notices as well, so check with a tax professional before exploring settlements. 

"Good old-fashioned haggling can go quite a long way given that you have a good case to make."

3. Appeal to the powerful.

The customer service representative who answers the phone can lower an interest rate or waive a late fee, but don’t stop there for more complicated requests, such as payment suspensions and balance reductions.

“You need to ask to speak to a manager or the credit division,” says Jeff White, financial analyst for FitSmallBusiness.com. “A simple customer service rep isn’t typically going to have authority to make these changes for you.”

Start by calling the toll-free number on the back of your card and ask to be transferred to the manager. If the rep is reluctant, politely but firmly insist.

In the event you still can’t access a change-maker, visit the issuer’s website to identify the company’s customer service executive. Email that person with a summary of your customer experience and what you hope to have happen with your account. Going straight to the top never hurts.

4. Know your card tricks.

Don’t want to pay a reward card’s steep annual fee? Contact the issuer and haggle it out, says Jim Barron, from Battle Creek, Michigan, who runs the personal finance website acceleratedfi.com.

“With Chase, I signed up for their Sapphire Preferred card because it came with a huge sign-up bonus of 50,000 to 75,000 points that I used to take a trip,” says Barron. “After the first year was up, I got charged the annual $95 fee. But you can get this charge waived by downgrading your card.”

Contact your card issuer and explain you want to keep your account, numbers, credit line and accumulated points but also want to eliminate the annual fee. Depending on the card issuer, you may be able to switch over to a more basic product and retain your bank of rewards.

Switching to a no annual fee card also will also save you a healthy sum instantaneously.

If you’re worried the negotiation will be too much effort, don’t be. “It was really easy to do and not a hassle at all,” Barron says.

5. Bring up balance transfer offers

If you see a 0 percent balance transfer card to shift your debt from a current, high interest card for a year or more, use that as a bargaining chip when negotiating interest rates.

Tell your card issuer you’re considering a balance transfer, in which case you’ll close the existing card, but you’d rather work with them to keep the account open.

“Credit card companies are usually aware of their major competitors’ offerings, so you should be, too,” says Calum Coburn, a consultant for The Negotiation Experts. “It will usually be more flexible in negotiating fixed charges if they’re aware that a competitor is offering you a better deal.”

Ask that your card’s interest rate be comparable to what you can get with the transfer. Odds are they won’t bring the APR to 0, but you may get a preferred rate.

Arm yourself with facts. As of January 2018, the average interest rate on new card offers for bad credit is 23.59 percent, but it’s 13.07 percent for those with good credit.

It may be financially savvy to stick with your original credit issuer anyway, as you can avoid the cost of the transfer fee, which is often 3 percent of the balance and tacked on to the amount you transfer.

If you want to improve your card’s interest rate or lower your fees, then you need to persuade the credit card company that it’s beneficial to the card issuer to do it.

6. Discuss a credit counseling agency’s plan.

Nonprofit credit counseling agencies have pre-negotiated interest rate and fee concessions with lenders. Many credit card issuers will reduce interest rates dramatically, with some even eliminating interest altogether for credit counseling clients.

Late and over-limit fees might also be dropped for people on a debt repayment plan.

To learn what’s available, book a free budget and debt appointment with an accredited credit counseling agency. With the information you get from your counselor, you can ask your credit issuers if they will match (or come close to) what you’d get if you signed with the credit counseling agency.

If your card issuers say no, and you’re eligible for the credit counseling agency’s plan, consider using it, McClary says.

Be aware, though, that there are downsides to these credit counseling plans, too, including a monthly administrative of around $25, having to close the accounts and agreeing to not enter into any new credit accounts while under the plan.

7. Make yourself hard to resist.

“Credit card companies are like most other businesses,” White says. “They want to reward their best customers. If you want to improve your interest rate or lower your fees, then you need to prove to the credit card company that it’s beneficial to them to do it.”

You won’t have much leverage if you’ve had a long history of spotty payments (especially in the recent past) or your credit cards are maxed out. If this your financial situation, concentrate on paying your bills on time for at least a year and drive down debt with higher than requested payments.

After you have improved your credit and financial picture, you’ll be far more appealing to your card issuers. They’ll see that you’re reformed and may want to grant you an interest rate break on the remaining debt so they can keep you as a happy customer.

After all, when you have a good credit rating, you can take your business elsewhere.

8. Prepare to walk.

Not all negotiations go smoothly, even when you’re in the right. In such a case, be ready to play hard ball.

“I have a Citi 2 percent cash back card and I got a notice from Mint.com that my card had just got hit with an interest charge,” Barron says. “Even though I had the card set to autopay, there was some glitch where it didn’t pay the full bill off so they charged me interest.”

Assuming he made a mistake, Barron went back to the app to make sure autopay was set correctly. A few months later Barron was assessed another fee, and he discovered that it was Citi’s error, so asked for a refund. Citi refused.

“I told them to shut down my account and close all of my cards,” Barron says. “I didn’t want to do business with a company that had ripped me off.  At first they said no problem, your account is closed. But about 24 hours later, I got a new email saying the fees had been reversed.”

And then there are also the negotiation “nevers.” Threatening an action that you’re not really prepared to take is chief among them.

“You’ll lose credibility when you’re forced to act and don’t,” Calum says.

Remember, no matter how much you may want or need a break, the issuer holds all the cards, so do not be demanding, weepy or obnoxious.

“Be low-drama and empathetic,” Calum says. “When you put yourself in the shoes of the agent who’ll be serving you, you’ll hopefully appreciate that too many people in a tight credit situation call up feeling very stressed and either take this out on the agent, or are difficult to negotiate with due to their unsettled emotions.”

Prior to any form of communication with your issuer, calm down and act rationally and friendly. “Remaining in rapport with the agent can be a very handy negotiation tool when navigating choppy waters,” Calum says.

See related: Credit card debt negotiation in 3 (not) easy steps, 9 debt negotiation tips for introverts


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Updated: 08-15-2018