I’ll make a long story short. I was talking with my very passive father about my wife’s upcoming trip to New York and how she used Amex miles to pay for the airline ticket. As we talked about credit cards, interest rates came up.
It became clear that my Dad was a member of the “simply play with the hand their dealt” group. He had a Visa with an interest rate of over 20% and never questioned it. Knowing I couldn’t make the call for him, I wrote him a script he could use to try and get his rate reduced.
To be sure it worked, I called on of my credit card companies to try it out. I hadn’t called to beat them up within the last two years, so it was something I had to do anyway.
Here is the script (after you get past all of the security questions):
Me: Hi, I will be closing this account and I have a question. I am sending a payment for $2,534.32 that will pay off my balance. When does it need to be there so that I am not charged any finance charges this month?
Them: Ok, Mr. X, I can help with that. First, I want to tell you that we appreciate your business and I see that you have been a customer of ours since 2002. Can I ask why you are closing your account?
Me: Well, I received an offer in the mail for a 9.95% credit card and your rate is 17.95%. I filled out their application and they gave me a $10K credit line, while you are only giving me $5,500. I plan on transferring my balance to them because of the interest rate. With the credit line increase, I plan on buying some new furniture for my bedroom and I know it will take a while to pay that off.
Them: I understand. I am going to check your account to see when it was reviewed last.
Them: It’s been a few months so in order to change the credit line amount, we will have to run your credit again. Is that OK?
Me: No, I heard it was bad to have credit card companies constantly running credit. If we have to do a credit check, let’s just close the account.
Them: Ok, I can help you with that. Let me first check one other screen.
Them: Yes. I show that we can lower your interest rate without running your credit. Your credit line would not increase though. Would you like me to explain the rate?
Me: Ok, sure.
Them: We have a program that is for new customers on our ABC Card. I can move your account to that program and you will receive a 12-month interest rate of 4.95% on new purchases and 21.95% on cash advances.
Me: What is the annual fee?
Them: There isn’t one.
Me: After 12 months, where does the rate go?
Them: It would go to 13.95%.
Me: Oh, that might make sense, but what about my current balance?
Them: That would move straight to the 13.95% rate. The 4.95% is for new purchases only.
Me: That doesn’t sound too bad. The other card didn’t have that intro rate. When you say “new purchases”, it that for any purchse or is anything excluded?
Them: That is for any new purchase or balance transfer. Cash advances do not apply.
Me: Let’s do that. Will I get new cards in the mail?
Them: Yes. Just call the number on the card to activate it immediately upon receipt and be sure to sign the back.
Me: What is the credit line going to be?
Them: You will have the same $5,500 credit line that you originally had.
Me: So the only thing that’s changing is the way the card looks and the interest rate right?
Me: Will you send me something in the mail explaining all of these new rates?
Them: Yes, you will get all of the details on the new card in the mail.
We went on to confirm the mailing address and 2 weeks later I had my card with the reduced rate. To net this out, I went from 17.95% to 4.95% for a year. If I don’t pay it off, that rate goes to 13.95% which is still 4 points lower than where I started. I don’t get the higher credit line, but I didn’t want that anyway.
My Dad then tried it and he had similar results with his card. He went from 20%+ to 12.95%. I am not saying that this is fool-proof and in fact I read somewhere that there is a 50/50 success rate with these types of tactics. Nevertheless, if you’ve neglected to beat up your credit card company, this is something to try (unless you are consistently late with payments. If so, don’t waste your time).