If you want better credit card terms, the best thing to do is call your card company and ask, a new CreditCards.com survey shows
Whether you want to avoid your annual fee, get a late fee waived, reduce your interest rate or raise your credit limit, there’s a good chance your call will pay off.
The survey of 952 American cardholders found that more than 8 out of 10 (84 percent) who have made any of these requests were successful. However, asking is rare. No more than 1 in 4 cardholders makes any one of the requests; added together, only about half of consumers have made any request at all.
Among those who do ask:
- 87 percent received a late payment fee waiver.
- 69 percent got a lower interest rate.
- 89 percent received a higher credit limit.
- 82 percent had their annual fee waived or reduced.
“I was surprised at the level of success, especially when it comes to asking for an annual fee waiver,” says Alex Johnson, senior marketing manager at FICO, creator of the widely used credit score that predicts whether you’ll borrow responsibly. “The takeaway is that you should always ask. The worst that can happen is that they’ll say no. But the data show there’s a pretty good chance they’ll say \u2018yes.’”
Half had annual fees waived, others had them reduced
Many premium cards charge customers an annual fee each year just for owning the card. More than half of respondents in the poll – 51 percent – were able to get an annual fee waived when they asked. Another 31 percent got the fee reduced.
That’s notable because many cardholders assume the annual fee is nonnegotiable.
The poll results reflect that assumption. Only about 1 in 10 cardholders (11 percent) has ever asked for a break on the annual fee. Cardholders were far more likely to ask their card company to raise their credit limit (28 percent), waive a late fee (25 percent) or lower their interest rate (19 percent).
“Consumers don’t ask about the annual fee because they think of it as the cost of the product, and in America, we generally don’t haggle over product prices,” says Bill McCracken, president of Phoenix Synergistics, a market research firm that studies the credit card industry. “A late fee, on the other hand \u2014 they think of as an extra fee that the card company isn’t anticipating, so they’re more likely to ask for a break on that.”
Daraius Dubash, co-founder of credit card rewards site Million Mile Secrets, says he has been able to get the annual fee waived on several cards, usually by calling and saying he’s thinking about canceling. But he says it is more difficult than it once was to get a \u2018yes.’
“Banks are getting more sophisticated, so they’ll look at how valuable you are and whether you are a big spender,” he says. “In some cases, they say \u2018no’ but offer bonus points or miles instead, as long as you spend a certain amount each month.”
Dubash says it’s toughest to get annual fees waived on premium cards with generous rewards and hotel cards that give you free stays, because their perks are the most valuable.
Stark generational differences
Younger baby boomers (ages 53 to 62) are the most aggressive in asking for annual fee waivers, according to the poll – and they’re extraordinarily successful. Almost all of them (97 percent) who asked had the fee either reduced (19 percent) or waived altogether (78 percent). Boomers also had the highest success rates when they asked for other breaks.
Because they typically have long credit histories and they are in their peak earning years, younger baby boomers who haven’t yet retired are some of the most profitable customers for financial institutions, Johnson says, so banks are motivated to keep them.
At the other end of the spectrum are the young millennials, ages 18 to 26. About 7 out of 10 (68 percent) said they had never requested any of the listed breaks from their credit card company.
When they do, their success rates are puny compared to older cardholders. Only 15 percent of young millennials have received an interest rate reduction, 32 percent an annual fee waiver and 49 percent a late fee waiver. That compares to overall success rates of more than 70 or 80 percent for other generations. Young millennials had more luck bumping up their credit limits, with 80 percent reporting success.
“The reality is, companies pull up the data and these young people don’t have much credit history, they have lower salaries and they don’t spend a lot on the card,” McCracken says.
By the time consumers turn 27, however, things turn around. Older millennials (age 27-36) ask for breaks – and get them – at high rates. In fact, the poll found that 93 percent of those ages 27 to 36 who asked for any of the listed perks from their card company were successful at least once. That’s the highest overall success rate of any demographic.
The silent generation, meanwhile, lives up to its name. The poll found that those age 72 and over rarely ask for better terms from their credit card issuers. Just 5 percent have asked for an interest rate reduction, and only 9 percent have requested a credit limit increase, compared to rates twice that for other generations. That may be partly because older Americans have fewer cards and carry less credit card debt than any other generation, according to Experian’s 2016 State of Credit Report.
Decisions made on a case-by-case basis
Credit card issuers say they make decisions about interest rate reductions, credit limit bumps and fee waivers on a case-by-case basis, evaluating a variety of different factors.
“We look at things like the card member’s spending and payment history with American Express, debt with other lenders, credit bureau scores and other credit report information,” says AmEx spokeswoman Ashley Tufts.
Johnson said American Express and other large issuers likely have sophisticated algorithms that weigh at your risk and profitability and then guide customer service reps.
When it comes to late fees, however, many issuers are willing to grant a certain number of waivers per customer \u2014 no questions asked. Discover, for example, offers all card members forgiveness on their first late payment, a spokeswoman said. And several current and former customer service reps told CreditCards.com that they are instructed to forgive one late fee every six months or every year, depending on the issuer.
Other survey findings
Here are some other interesting results from the poll:
- Republicans are less likely to ask for a break. Fifty-five percent of Republicans said they hadn’t asked their credit card company for any of the listed breaks, compared to about 45 percent of Democrats and Independents. When they did make the request, Republicans were denied slightly more often than respondents with other political affiliations.
- The more you earn, the more likely you are to get a break. Those who earn over $75,000 a year have an easier time securing late fee waivers, annual fee waivers and credit limit increases than those who earn less. However, income level does not appear to affect your likelihood of getting an interest rate reduction.
- Couples ask for – and get – more help on late fees. Those who are married or living with a partner are almost twice as likely to ask for a late fee waiver compared to single people. And about one in four (26 percent) reports success, compared to just 15 percent of those who are not married or living with someone.
- Consumers don’t seem to be catching on. Despite headlines touting the success rates of cardholders who ask for late fee waivers and interest rate reductions, the percentage of people making those requests is no higher than it was in similar CreditCards.com surveys in 2016 and 2014. “Active credit card customers don’t realize how valuable they are to a credit card company,” McCracken says. “It’s more expensive for them to acquire new customers than it is to keep their current ones. So you should make these requests, because companies are going to do what it takes to keep you.”
CreditCards.com commissioned Princeton Survey Research Associates International to obtain telephone interviews with 952 credit card holders living in the continental United States. Interviews were conducted by landline and cellphone in English and Spanish by Princeton Data Source from Feb. 16-19, 2017 and March 2-5, 2017. Statistical results are weighted to correct known demographic discrepancies. The margin of sampling error is plus or minus 4 percentage points.
See related: 9 confusing credit card terms explained, 5 times it makes sense to call your card’s customer service, New credit card has so-so terms? You have choices