With credit card debt piling up for consumers across the country, it would be nice to not have to worry about high interest rates as well.
Fortunately for consumers, it may be possible to negotiate a lower annual percentage rate on their existing credit cards, according to a report from the consumer advice website Mint Life. Of course, credit card companies aren't exactly going to be eager to lower the interest rates for just any customer, so it's important for consumers to ensure that their credit is good enough to even bother asking.
First, it's important that consumers know the risks involved with simply asking for a lower rate, the report said. If a consumer isn't absolutely sure that their history is worthy of a lower score, they shouldn't even ask. When credit card companies receive calls about the terms of an account, it causes them to look deeper into the account and the consumer's credit history. The additional work it has to do, which could even include the requesting of extra documents like proof of income, costs the company money. If they don't like what they find, they could lower the card's limit, which then negatively impacts the credit score.
It is, therefore, important that consumers know as much about their own credit as possible before calling. They should check their credit to ensure that it is immaculate and completely free of errors. If there are errors on a credit report, consumers should dispute them with the credit bureau before trying to negotiate with their lender.
Because some issuers may request additional paperwork with information that doesn't appear on a credit report from the consumer, it's important to have it ready to go at a moment's notice, the report said. If the lender requests a paystub, the consumer should have one available to be mailed out that day.
It's also important to have a contingency plan in case the request for a lower APR is denied, the report said. Consumers should be prepared to transfer their account to a different lender, which could convince the current one to lower the rate.
A recent CNN report said the national average for rates on all cards has climbed in the last six months as banks prepared for the Credit Card Accountability Responsibility and Disclosure Act to take effect.