When Your Bank Says No Its Time To Explore Options
Lenders Are Reluctant To Lower Credit Card Rates
The sub-prime crisis and the resulting high rate of foreclosures are the primary reason why lenders are reluctant to lower credit card rates. Those were the sunshine days for both credit card companies and consumers alike when access to plastic was quick and easy. Credit score monitoring was not as strict as it is today and lenders left no stone un-turned in wooing customers. Low interest rates were a common promotional offer that lasted for months and even years in some cases leading to card users borrowing credit indiscriminately and reaching a point of no-return!
High Credit Rates Good For Financial Health?
There is no doubt that several credit card users are neck-deep in debt. A lousy repayment attitude can instantly reflect on your credit score. A poor credit score means that lenders will be even more cautious and safeguard themselves against potential default by charging a higher rate of interest. It serves two purposes, the first being that with a poor credit score and high amount of debt, you’ll be discouraged to get a new card and the second one being that even if you’re desperate for credit you’ll not be able to indulge in an impulsive buying spree because of the high interest rate! Any late payments will result in your existing debt doubling and tripling over the next few months which will adversely affect your credit score.
In short, borrowing on high interest may prove extremely costly in the long run and you may find yourself struggling to get out of a vicious debt cycle! If the high rates of interest deter you from getting a new credit card, may be that’s a good thing. You can take some time off from your spending patterns and work towards consciously bettering your credit score. Work out an effective repayment schedule on your existing debts. A better credit score will encourage lenders to lower interest rates on new cards. With a good score you’ll be able to negotiate a good interest rate for not only credit cards but also other types of loans!
How to Negotiate A Low Rate Of Interest on Credit Cards
Your creditworthiness has a direct impact on the interest rates offered on your credit card. If you have never defaulted on your payments and effectively utilized your credit limit you will likely have a good credit score. The next step is to negotiate a good lending rate. By default, a lender may charge higher rates than if you were to specifically ask for a lower rate. With a good credit score and a good repayment history (sans late payments and defaults) you have all the arguments to negotiate the interest rate on your credit card!
You need to compare credit card deals online and equip yourself with the latest data on your credit history to make a serious case with your lender. A written request or continuous follow-up is usually met with a positive response. If you’re not getting a better offer, chances are great that your interest rates are already in the lower ranges. If not, negotiate on annual fees, processing fees or credit card transfers etc. Do not be rude or go overboard with arguing for a lower interest rate. If the lender does not give you specific reasons for not lowering your interest rate, you can always switch to another lender!