Attention: You Lowered Your APR Just By Asking, Again.

You guys are so awesome. You call your credit card company and you ask them to lower your APR…and they do! It just keeps happening! Reader Jacob writes:

    I’d been thinking seriously about getting a new card and transferring the balance…. I was fairly certain that I could find a card that would allow me to transfer my balance and pay 0% for at least a year (Instead of paying 500+ bucks in interest over the next 6 months with my current card).

    Before I switched, I figured I’d give my bank (a mid-size, midwestern outfit) a chance to make the first offer. I called, quickly got a real person, and explained casually that I’m currently paying 16.5% fixed APR, I’m a longtime customer, and I wondered if I qualified for a better rate. Without much hesitation, he offered me a 12.5 % variable rate. OK good start. Continuing the casual conversation I spoke about getting a new card (even asking what other cards they offered) and transferring the balance, because it made sense to me to not pay so much interest. Out of nowhere came an offer for a 3.9% APR on my current balance for 6 months.

Way to go, Jacob. Lowering your interest rate is a good step towards paying off your balance! You are going to pay off your balance, right Jacob? —MEGHANN MARCO

Read Jacob’s email inside.

Jacob writes:

    Reading Consumerist daily, I’ve become a more emboldened consumer, this is a recent success story.

    I have been carrying a balance of about 5-6k on a credit card for over a year. I’ll pay chunks of 1 to 2k off at a time but some of my business expenses bring the balance back up quickly. I’ve started to make a bit more money and I’m committed to paying down my balance in the next few months. But in the meantime, I’m paying fixed 16.5% APR on my balance, almost $95 a month. I have good credit and this my only card (my first) which I’ve had for several years.

    I’d been thinking seriously about getting a new card and transferring the balance. I found a good website, http://www.creditcards.com, that compares transfer rates, APR’s, other benefits and fees. I was fairly certain that I could find a card that would allow me to transfer my balance and pay 0% for at least a year (Instead of paying 500+ bucks in interest over the next 6 months with my current card).

    Before I switched, I figured I’d give my bank (a mid-size, midwestern outfit) a chance to make the first offer. I called, quickly got a real person, and explained casually that I’m currently paying 16.5% fixed APR, I’m a longtime customer, and I wondered if I qualified for a better rate. Without much hesitation, he offered me a 12.5 % variable rate. OK good start. Continuing the casual conversation I spoke about getting a new card (even asking what other cards they offered) and transferring the balance, because it made sense to me to not pay so much interest. Out of nowhere came an offer for a 3.9% APR on my current balance for 6 months. OK, now were talking.

    With all the hassle of applying for a new card, the usual balance transfer fees (usually around 3-5%) and the strain of a new line of credit on my credit history, this seemed like a good deal and I was happy to remain loyal.

    Moral of the story: if you have options, you have some control. Be nice, be causal and let the subtext, (“I’m getting screwed here and I am more than happy to go to another issuer and save some significant money”) speak for itself.

    Jacob

Comments

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  1. thrillhouse says:

    Lowering your interest rate is a good step towards paying off your balance!

    No, behavior modification is a good step towards paying off your balance. What Jacob ‘accomplished’ here is pointless if he doesn’t change his habits, pay off the cards, and stop spending more than he makes. Otherwise, in 6 months, he’ll be deeper in debt with another outrageous interest rate.

    See the CSR is the one who really won here. He kept the customer. Knowing full well that Jacob is on the hook – he has the taste for debt. The CSR slipped him a shinny nickel and Jacob jumped all over it. They didn’t look at Jacob as a longtime customer, but rather as a longtime debtor. Thats all that a credit score tells these people – that you’re willing to stay in debt for an extended period of time and keep cutting them fat checks.

    Knowing Jacob’s account history and with Universal Default on their side, the CSR knew that the deck was stacked against Jacob.

    Sorry to piss on your parade, its nothing personal, but this is no victory.

  2. thejbs says:

    Thrillhouse, this is Jacob, the original author of the email.

    Uh, can you explain why I’m a sucker for paying 3.9% instead of 16.5%?

    Anyone who claims to be a ‘rockstar’ via their avatar photo surely has a worse credit history than I do. What’s with the holier than thou commentary?

    Of course the bank would rather keep the interest accumulating, if even at a lower rate, but the point is they don’t have the power to charge that much in an open market where the consumer has choices.

    And yes, I will be paying off my debts, a recent job that involved 5k in expenses resulted in a net profit of 6k, much of which will be going towards debt. I shouldn’t have to pay 16.5% while I do it.

    Yes, credit cards are evil, but there is always a lesser evil.

  3. While I’m not as cynical as thrillhouse (though I wholeheartedly agree with him), if Jacob really felt that he could get another card with a 0% balance transfer offer… why didn’t he?

    0% is less than 3.9%…

  4. ElPresidente408 says:

    I lowered my APR to 0% by paying in full

  5. SuperJdynamite says:

    “No, behavior modification is a good step towards paying off your balance. What Jacob ‘accomplished’ here is pointless if he doesn’t change his habits, pay off the cards, and stop spending more than he makes.”

    Hey, thrillho, maybe you could enlighten us as to how Jacob should change his spending habits? All I was able to glean from Jacob’s mail was that he has periodic business expenses which drive up his balance. You seem to be intimately familiar with Jacob’s finances, so maybe you can tell us how he can avoid putting these expenses on his card.

  6. LTS! says:

    Wow.. someone’s getting screwed. So he went from a 16.5% to a 12.5% variable and got 3.9% for 6 months. If he has a history of not paying the balance I’ll venture a guess that that VARIABLE rate will suddenly jump back up in the neighborhood of 16.5% after 6 months.

    Let’s see, I hit financial hardship once and was forced into credit card debt. Through careful applying and being smart with my money I managed to get my outstanding balance of $5k into a balance transfer that has a whopping 1.9% APR for the life of the transfer. Now that’s helpful.

    My other credit card is a 4.99% fixed rate. I have a rewards card with a higher variable rate and no fee but there’s never a balance on that.

    So keep working at it. By the way.. having more credit cards (not too many) will up your credit score and you’ll be offered lower rates. Don’t cancel the original card, it’s harmless if it has no fee on it. Get a new card and become even more appealing to the credit companies.

    I’m glad he accomplished something, but I think he could do better unless he has a hideous credit rating in which case perhaps he should rethink how he uses it. If he routinely has to carry a balance for business expenses then the business must not be doing so well. Moreover, why not get a business card?

    Finally, and this is important. If you are going to the banks for a card you’re never going to get as good a deal as if they are coming to you. Receiving card offers may be obnoxious and most of them will be complete jokes but every now and then you get the sweetheart deal. (see 1.9% and 4.99% referenced above).

  7. thrillhouse says:

    Glad you asked, SuperJdynamite.

    No, I don’t know Jacob, but his story is not unique. Clearly he’s not in control of his finances. Carrying a balance of $5-6k for a year? Thats not in control. Nor is it periodic. Either the business is not profitable enough to pay down the balance, or he’s chosen to put it elsewhere. Neither of which makes sense.

    See its not a tough equation – its either the income or the out-go. He either needs to get his income up (second job, Jake?) or spend less. But thats not the whole problem.

    I know you think this is all about math and interest rates and being really savvy. Honestly, its 80% behavior. If it were all about math then Jacob would have never signed up for the debt at 16.whatever%. Nobody would.

    You want behavior change? Pay off the card and put it thru the shredder. Try doing this thing called a budget and actually stick to it. I don’t know, go nuts – save some money up in whats called an “emergency fund”. Then when these ‘periodic expenses’ come up, then you can cash-flow them. If the business can’t cash-flow itself, then he needs a new plan, or its time to shut the doors.

  8. Helvetian says:

    I called Bank of America several weeks, regarding my World MasterCard. The rep changed my rate from 8.99% fixed to 6.99% fixed. Amazing rate, they applied it to Categories A, B and C. Which are Balance Transfers, Cash Advances and Purchases. I received a change in terms letter and my statement reflected the changes. So then I called CapitalOne and got my rate lowered from 8.90% to 7.90% fixed. I also tried Citibank, they don’t do fixed rates and indicated me Prime + 3.99% is the lowest available. Very happy with these wonderful rates.

  9. phrygian says:

    thrillhouse — Sometimes, medical emergencies happen that aren’t paid in full by insurance and are more than what you’ve got in savings. It’s happened to me before and I put the amount on my credit card, knowing it would take me a year to pay it off. We should all be so lucky as to never have such problems, but such is life.

    3.9% is much better than 16.5%. As long as Jacob watches his other credit card purchases, the interest reduction really will help him pay down his balance more quickly.

  10. kiloman says:

    I’ve had a PNCBank/MBNA (now Bank of America?) credit card for about 5 years now. For about six months in college, I had carried a balance of several hundred dollars. Otherwise, it gets paid off every month. So the APR isn’t a big deal, but when I do pay interest, I’ll want it to be low. I called to ask about lowering my 9.90% APR (all categories). The customer service representitive assured me he could not lower the rate at all. I never suggested I would cancel my card. And since it’s typically paid in full, I’m probably not a profitable customer. So no luck.

  11. thejbs says:

    Dear Thrillhouse-

    This is Jacob, Consumerist was kind enough to give me an account so I could answer your comments.

    You seem to have a hard-on for all things credit card but you fail to see the whole picture either for my situation or in general.

    First, my situation – after a couple years of growing a business as a photographer I am profitable, and will continue to be more profitable in years to come. However to get to this point, my work involved tens of thousands of dollars of photo equipment, computers, etc. A recent job that netted me over 5k (most of which IS going to pay down debt) also required over 5k in plane tickets, hotels and car rentals. Many businesses are not immediately profitable – the long term reward for taking a risk is doing what you love, making good money, and not being a company man until retirement. (you can keep your second job, thank you, I have a career)

    Now I do agree with you about not carrying debt, having cash reserves to cover expenses, all of which I will be moving towards in the next year.

    But Thrillho- scratching around in your nest of shredded plastic you do miss a very big point:

    Credit is a necessary element of your financial life. Unless you are sitting on a pile of money from mummy and daddy, you will need a credit history and responsibly maintained lines of credit: both to cover necessary purchases and to qualify for business loans and home mortgages. Credit works both ways: you can get sucked into it and pay the price, or you can use it to expand and grow.

    I am working towards the latter and I think paying 12 points less on my current balance is an excellent start.

  12. thrillhouse says:

    Glad to see you join the conversation, Jake.

    Its also nice that you see your situation as unique, but the reality is that many small business owners make the same decisoin that you did – choosing risk over patience. Your assertion that starting a business requires debt is just foolish. Buying cheap, buying used, working from home – there’s lots of ways to cut costs when you’re getting stated and working toward profitability. And I know people in photography who have done these things. Also, knowing the percentage of new businesses that fail in the first year does not help your risk/reward arguement.

    You’re also dead wrong about needing credit. Its a myth. You simply don’t need it. I’ll give you the short list:
    >Debit cards not credit
    >live on a budget and make savings a priority
    >Buy used cars – pay cash
    >buy used in general – pay cash
    >Manual underwriting – instead of FICO score mortgages

    Its not as hard as Visa/Discover/AmEx/MC would like you to think. Lots of people live this way. Some even sacrifice, live below their means for a few years and pay cash for a house. Crazy, I know.

    As for me, I started out with nothing like most people. My pile of cash came from intensity, sacrifice, and saving. Iterest rates became irrelevant as the debts got payed off. Go ahead and celebrate your ‘victory’. The real wins come from behavior change.

    There will always be another widget to buy. Some other new and glorious piece of equipment to buy that you didn’t save up for, or just can’t afford. Unless you change your habits, it will be the same song, second verse.

    So thanks for coming by. Do let us know how it goes.

  13. thrillhouse says:

    phrygian -

    Trust me, I know that real emergencies happen – not just uncontrolled spending. Save up an Emergency Fund of 3-6 months expenses. You’ll find that there aren’t too many storms that you can’t weather with that umbrella.

  14. thejbs says:

    Mikey, I don’t think I’m the only one who needs a little behavior modification.

    I do agree with (and follow) most of your principles, buying used, buying less, using debit cards – but you take it to such an extreme that I find it a bit obnoxious.

    I have carefully constructed my business, upgrading and acquiring what I need as I need it, selling off what I don’t, working from home, building client relationships, creating good work. I do more with less than most photographers I know.

    How, exactly, does an entrepreneur save all the start-up money they need to start their business if they are enduring a multi-year period of not having their business running at all? (short of your Spartan, grin and bear it, true-grit, lifeless job for the sake of savings plan philosophy).

    If every business large or small grew without loans, outside investment or some other form of support, many would not exist at all. Yes, many do fail, not because of credit, but because of haste and short sidedness.

    In some cases you could be losing money by not acting on your plans sooner. Life is about more than money and living inside a bomb shelter. Loosen up, and please give up the martyr-role of saving us from our credit sins.

    And his epitaph read…”and without credit, he lived without debt.”

  15. ValkRaider says:

    Nice to see so many perfect people in the world.

    But for the rest of us who may have flaws, I appreciate the information that we might be able to save a little money that would otherwise have been spent on interest.

    In a perfect world we would always like to pay cash… And we wouldn’t eat sweets or watch TV either. And our kids would all grow up to be astronauts, presidents, or doctors. And there would be no crime and love would conquer all.

    So get off your f*$king high horse and let people share information without being judged. It is none of our business what Jacob did to run up debt. And if he did it all gambling and buying crack and hookers – well good for him. You only live once.

    damn self righteous people.

  16. thejbs says:

    I just found out that crack and hookers are valid business deductions!

    Take that thrillhouse!

  17. Kind of off topic – but I got a letter yesterday from Sears on their card, saying I was being moved to a new Sears Mastercard – which chould be used like any other credit card.

    The best part, no annual fee, and 15.4% fixed. This is down from the 24% rate that was on the stand-alone Sears card.

    Separately, I have been mailed about a Chase card, for 0% for 6 months, and then 9.9% fixed with no annual fee, which beats many of my other cards.

    My question for commenters, have you had an issues [i.e. been screwed over by Chase Bank]?

  18. thrillhouse says:

    Glad to see that you’ll get some benefit from all that crack you’ve been smokin’, Jake. The IRS does also ask that you report any bribes or kickbacks.

    How, exactly, does an entrepreneur save all the start-up money they need to start their business if they are enduring a multi-year period of not having their business running at all? (short of your Spartan, grin and bear it, true-grit, lifeless job for the sake of savings plan philosophy).

    You mean a job? You mean getting a job and saving money? Maybe even a second job for a short period of time? I know that you don’t want to hear it, but it requires maturity. One definition of maturity is learning to delay pleasure.

    Look, I made mistakes with money just like everyone else. We woke up and found ourselves deeply in debt only to learn that we were average. The average American has $40k in consumer debt (meaning not including the house). Oddly enough, none of it was on credit cards. Long story short, we made the decision that we were not going to live that way. We got our act together, we made a budget and lived on it – still do in fact. We payed off $40k in 20 months. Its amazing what happens when you take control of your finances.

    So coming out the other side of debt and seeing not only how great it is, but totally possible it is to live debt free. No, I’m not trying to save you from your own stupidity, only you can do that. I simply don’t like it when people try to pass off financial stupidity as fact – especially on a site that is supposed to be pro-consumer. You just don’t have to live that way.

    Oh, and your epitaph – not so hot. Proverbs 22:7 said it much better, “the rich rules over the poor, and the borrower is slave to the lender”. But really less is more – maybe something simple like “paid for”, you know unlike your BMW.

  19. thejbs says:

    Ahhh, now I get it. It’s the stodgy WASP thing, suffering now for higher rewards later.

    I’ve seen people like you wither away working endlessly at pointless jobs, working 50 years just to scramble off to retirement. Tell me, what do you work towards besides money in the bank? maybe you could enlighten the readers of Consumerist about what a MAN LIKE YOU does for a living? What is a REAL job?

    Bible Salesman? hmmm?

    (I know you won’t let me get the last word)

  20. Helvetian says:

    Just another update. My Bank of America Rewards AmEx card was at 9.9% fixed, I noticed they are offering 7.9% fixed on the site. I called the Rates Team, they insisted that was for new customers only, after a little push, she agreed and changed me to 7.90% fixed beginning next bill cycle. Thanks again, it’s nice to get my rates lowered. I also got a 25% increase in my credit line!

  21. humphrmi says:

    Hey Thrillhouse, take it easy – if it weren’t for borrowers like Jacob, CC companies would never tolerate ‘deadbeats’ like us who pay off our balances every month and pocket the rewards / rebates.

  22. SmoovyG says:

    Bon Jour, Pee Wee -

    I’d think twice about Chase. My wife and I had managed to get away from them and their horrible custmer service 8 years back. Since then, the only credit card we’ve owned are her American Express and a Disney Visa (the wife loves the points). The Visa began as one bank, morphed into another, and some time in the last year turned into a Chase card.

    Last month, we received a form letter from Chase informing us that the grace period was now null and void. From now on, purchases made on the card will begin to accrue interest from the date they appear on the account, not after the first month’s due date. Since we paid off the card every month in order to avoid interest, this kind of killed the usefullness of the thing for us.

    Just some food for thought.

  23. Helvetian says:

    I agree with Chase, the customer service is based in India and absolutely horrible. Even when I get US reps, the service is lackluster.

  24. Thanks Smoovy!

  25. tedyc03 says:

    Just by calling Citibank and telling them I was going to transfer my balance to a lower interest card, they cut my interest rate from a good 15.74% to an awesome 1.99% for 9 months, with 4.99% plus prime after (which is 12.74%). This will save me about $500 on finance charges over the next 9 months, and it applies to new purcahses as well as old ones.

    Ask and it shall be given to you!

  26. kc-guy says:

    In the spirit of reviving long dead threads:

    Get a credit card that you will used strictly for business purposes. The interest treated by the IRS as a business expense (Schedule C.)

    Nothing wrong with Uncle Sam helping you paying down your balance. :D

  27. sabrinad says:

    Heh. I just did this today, although I have no revolving balances at the moment — I called all 4 of my cards and asked for my APR to be decreased. One of them was already at the lowest rate they offered. One of them refused. Two of them immediately, and without any pushbacks, offered me lower rates. The one that refused had the highest rate — by a wide margin — but I don’t really care that much because I never use it anyway because I hate the issuer. Apparently I should write them a letter, hold my breath, and hope for the best. Now that’s Chase Freedom!

  28. DoubleEcho says:

    I wonder if anyone can help me out here – I just called BoA on my Visa Gold card, as I want to lower the APR. Currently I have a 23% APR from one late payment that was about 2 years ago, and it hasn’t decreased since (This was during a period where I was unemployed due to my company going bankrupt – woohoo, fun times!). Anyways, I called up and was told that none of the “Account Managers” that could lower APRs were in today, and to call 1-866-472-4129. Naturally, calling this number gives an operator message stating that it is a non-working number.

    Does anyone have a known number I can call to talk to someone at BoA about getting this lowered? I’ve payed before the due date every month after that one late payment and I always pay more than the minimum (Usually double), and my balance is less than 1/4 of the actual credit limit. If they can’t lower this, I don’t think I’d have any reason to stick with them over another card holder.