Ask The Consumerists: Get A Lower Rate Without Hurting My Credit?

Brian writes:

Hi Meghann, nice work on Consumerist. You all do a great job, and I enjoy the blog, read it a lot, and learn a lot from it. I thought I would run a situation/question by you and see if you all have any answers or know where to find them.

I follow all the sneaky stuff credit card companies do, like increasing your interest rate if you are late on another payment. A few weeks ago I got a letter that my balance had been doubled, even though I had never asked for it to be.

Last time I checked my credit rating, I had no late payments on anything, and my score was pretty good (700+ I believe). Anyhow, while paying bills last night I noticed that my credit card charges me 18% on newer charges, and 30+% on charges before Jan 2006!! 30%!! Highway robbery.

So I don’t know if you can answer any questions or point me in the right direction, but my questions as a consumer are:

1) What are my chances of getting the interest rates lowered if I call and threaten to cancel my account and transfer the balance to another card. I get dozens of credit card offers for much lower interest (in the short term) in the mail weekly.

2) Is it true that having a credit card for a long time helps your credit? I have had this card for 14+ years and would hate to cancel it and ding my credit.

3) If I open a new account to transfer the balance too and leave the original credit card active (but with no balance) will adding the new card ding my credit?

I am thinking if I got a card with 6% interest for 1 year, I could transfer the balance, and with the difference in interest rates, pay a huge chunk off vs what I would do paying the same amount on the older card. But at the same time, if I can threaten to pull my account from the original card and get a lower rate, I would rather do that.

Any pointers, tips, or thoughts?


Hi, Brian. Thanks for writing. Don’t worry, you concerns are not unusual. With so much importance places on your credit score, lots of people are in a panic not to disturb the beast. Thankfully, nothing you’re about to do should hurt your score that much.

Let’s answer your questions one at a time:

1) What are my chances of getting the interest rates lowered if I call and threaten to cancel my account and transfer the balance to another card. I get dozens of credit card offers for much lower interest (in the short term) in the mail weekly.

This depends entirely on your bank. The good news is, it doesn’t cost anything to try! What you’ll want to do first is research the best credit offers. There are several websites that help you do this! Armed with the knowledge of another bank’s offer—call your bank and ask them to match it. If they won’t, then they won’t, but you’ve lost nothing because your research for the next step is done.

2) Is it true that having a credit card for a long time helps your credit? I have had this card for 14+ years and would hate to cancel it and ding my credit.

Your credit score is broken up into several categories that are considered when calculating your score. One of them is length of credit history. So, yes. Closing this account would shorten your credit history. Thankfully, you don’t need to close it. You can leave it open and transfer your balance.

3) If I open a new account to transfer the balance too and leave the original credit card active (but with no balance) will adding the new card ding my credit?

Uh, sort of. New applications for credit have an impact on your score, but not a huge one. If, say, you go around applying for and getting denied from 12 credit cards a day—yeah, that’s bad. Simply opening a new card that you can afford? You’ll be fine.

So to sum up: Research the best offers available to you. Call your bank and ask them to match them. Act accordingly. Keep your old card open, but don’t run up another balance. Pay off your balance!

Sound like a plan? Good luck, Brian! Any suggestions for Brian in the comments? Have you been there? What did you do? —MEGHANN MARCO

BRIAN’S HOMEWORK: Easily Compare Best Credit Card Offers
HOW TO: Play 0% Balance Transfer Credit Cards For Fun And Profit
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Save On Your Credit Cards With Savings Agent
Attention: You Lowered Your APR Just By Asking, Again.
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(Photo: Sam Wilkinson)


Edit Your Comment

  1. rekoil says:

    I’m presuming that when the writer says “my balance has been doubled” what he really means is either the interest rate or the credit limit…

  2. humphrmi says:

    Yeah, I thought the same thing, if my balance were doubled without my authorization, I’d be pursuing charge-backs like crazy right now.

  3. shaunirving says:

    Amen on points 1 and 2. I would also add, in regards to #3, adding another line of credit may actually improve your rating depending on how much you owe in outstanding balances. 30% debt-to-credit ratio is the sweet spot; less than that, and creditors view you as someone who doesn’t use credit much (and is less profitable), more than that and they see you as more dependent on it (perhaps to a fault).

    Let’s say you have a $1,000 limit card with a $600 balance (your debt-to-credit ratio is 60%). If you got another card with a $1,000 limit and transferred your balance to it, your ratio would now be 30%.

    I wouldn’t recommend keeping balances just for the sake of trying to reach 30% (credit is expensive, after all). But realize that having more credit extended to you (through a new line or a credit limit increase by your current company) can be a good thing as long as you use it wisely.

  4. chipslave says:

    An obviousd solution would be to just pay the damn things off and close your accounts.

    A “plastectomy” as Dave Ramsey calls it.

  5. enm4r says:


    Why close an account that has 14 years of history tied to it with (likely) a decent credit limit? Pay the thing off, sure, but why close an account that is obviously helping your credit when you could, :GASP:, just choose not to use it?

  6. Dibbler says:

    The number one thing to do is to find a Credit Union in your area and open up accounts with them.

    I’ve found that there are fewer fees and what fees they have are typically half that of banks. I cut up my 3 Chase credit cards which started out with low interest rates and then slowly increased every couple of months up to 17.5% and replaced them with my Credit Union Visa with a nice fixed 7.9% interest rate.

  7. mac-phisto says:

    i’ve got $10 that the card he’s referring to is a BOA card. here’s the trick i used:

    me-hi. i’m on capitalone’s site right now where they’re offering me 0% on balance transfers til next year & 6.99% for the life of the balance after that. i’m a click away from moving the $2000 i have parked on this card over.
    csr-why would you want to do that?
    me-well, you raised my rate from a fixed 11.99% to a variable that’s now at 19.99% which is the worst rate i have on all 6 of my charge accounts except for the other card you just bought & raised from a fixed 12.99% to the same rate.
    csr-let me see what i can do for you. *clickity, clickity* the best rate i can offer is a fixed 16.99%. how’s that sound?
    me-that’s the best you can do?
    csr-would you like to take this opportunity to move some of your balances from other accounts at this great rate? (shocker to me-this guy was rattling off my open loan balances right from my report)
    me-no thanks. *clicks submit on capitalone balance transfer*

    maybe someone else will have more luck than me.

  8. XianZhuXuande says:

    Do not close the card. Do call and ask for a lower rate. If you threaten to cancel, most card companies are much more willing to give you a better rate through their retention team, but this depends on the company (I didn’t see it mentioned). As long as your credit is good, do some research and find a 0% APR balance transfer deal (you can find some with no additional fees on the ‘net) and send the balance on over. Come up with a payment plan to get rid of the debt.

    You don’t want to close the card because of the card’s history (assuming it is good, here). That will be a nasty blow to your FICO. If you do have to transfer your blaance (it is easy with good credit) you can then negotiate with the card company about a lower rate. They probably want that higher rate on your card because you are carrying a balance. Once you’ve transferred the balance, you are in a position to say they won’t see much use if the APR remains so high.

    Above all else, do not close the card with a balance intact!

    (Even if you don’t use the card anymore, sockdrawer it and bring it out once or twice a year just to keep it active and reporting.)

    Adding a new card will possibly ding your FICO score ever so slighly on the short term, but in the long-term it will balance out in your favor (you will have another positive reporting line of credit). One new card does not bother most credit applications, but it can be trouble if you are shopping around for a mortgage or car loan in the next six months. Car loans are easier, mortgage providers like to see that you aren’t actively shopping around for new credit lines.

  9. XianZhuXuande says:

    @mac-phisto: Great way to start, but you missed a step. Many people, in negotiating a lower APR, have better results after they say ‘that isn’t good enough’ or ‘I need you to do better’. From personal experience, I usually get a much lower rate after asking these questions and making a few phone calls. Usually they come from special departments such as account retention or from an account manager. Loan officers, if you can speak with them, can also usually make better deals.

    Either way, don’t give up on the negotiation too soon. Some banks will toss you in a heartbeat, but others will negotiate you a step at a time. In the end, they really don’t want to lose you as a customer.

  10. mac-phisto says:

    @XianZhuXuande: yeah, i remember negotiating a discover card down from 19.99% to 9.99% back in the day by just saying no to the constant “is that good enough?” from the csr. this guy seemed pretty firm & i didn’t really feel like fighting the hard fight. i pretty much had my mind made up – the capitalone offer was excellent.

    on the bonus side, he gave me 10,000 miles & waved my annual fee, so the experience wasn’t totally lost.

  11. kscottz says:

    Recently I had an eye-opening experience with how debt to credit ratios affect credit scores. A few months ago I paid off and closed one credit card, and paid off a significant portion of the balance of another card (Capital One). I then requested that my credit limit be lowered on the Capital One card. I had the card’s limit lowered to about 90% of the balance of the card (about 50% of the original limit). A few months latter, when I received my insurance bill (AAA) it had increased by about $75. I called my agent and she explained that the changes in my credit score had caused the increase in my insurance premium.

  12. Buran says:

    @chipslave: Don’t. It’ll hurt your score. Open accounts that have existed for a while boost it. Pay the balances, then just put cards you don’t plan to use in a drawer somewhere til they expire, then cut them up. (this way, you have them available for emergencies).

    I have an Apple Credit Account dating from their MBNA days sitting in my Bank of America online banking with a $0 balance. (I paid off the laptop a long time ago). But I leave it open for the score-boosting bonus.

    (I have not personally had any problems with BofA, by the way, but then I’m careful with my money, and cross my fingers they won’t goof up. If they ever DO goof up, though, definitely I’d look at joining my bf’s credit union after we’re legally married).

  13. MarkMadsen'sDanceInstructor says:

    I disagree with the above statement that having a 30% utilization on your credit cards improves your credit. I have never exceeded 10% utilization for more than a month on any of my credit cards, and at last check, my FICO scores averaged around 760, i.e. a score that qualifies me for the best mortgage/auto loan rates. Actually, the lower your utilization is, the better your score is, although, you are probably correct in that you should show some balance so they know you are using the card.

    Moreover, one of, owned by FICO Inc. suggests that paying down your balances as low as possible is one way to improve your score.

  14. MarkMadsen'sDanceInstructor says:

    Whoops, typo, it should be:

    *one of’s suggestions…..

  15. Thermopyle says:

    Uh wait. Closing the card doesn’t affect the length of your credit history. It’s not like closing the card wipes it off your credit report. It’s still on there.

  16. Thermopyle says:

    @Jeff from LA:
    That is faulty reasoning. Just because you have a good score at 10% utilization doesn’t mean you wouldn’t have a better score at 30% utilization.

    There’s a balancing point. The more available credit you have the more ability you have to get in over your head. Of course if you have all of your cards maxed out that hurts your credit score as well…thus’s suggestion to lower your balances. (Note that they don’t recommend lowering them “as low as possible”)

    Of course this is all just so you can play the credit industry’s game. Pay off all your cards and close them. You don’t need a credit score. Don’t borrow money. Of course you may want a house and few people can pay cash for a house, but you don’t even need a good credit score to obtain a low-interest mortgage. Look for banks that do manual underwriting.

  17. XianZhuXuande says:

    @mac-phisto: Yeah, my best memory of APR haggling was of my original CapitalOne. As some may know, CapitalOne hates to upgrade their sub-prime cards or wave the annual fees on said cards. I didn’t want to close it as it is one of my original credit lines, but I didn’t want to pay yearly, and I wanted a higher credit limit so it didn’t look so bad to other creditors.

    They wouldn’t budge on the credit limit (because I don’t use it regularly) though they did wave the annual fee. I wasn’t happy and over three phone calls I kept getting the APR dropped as a consolidation offer to keep me from closing the card. It went from some 20% down to about 8.25% (roughly equal to the prime rate), but fixed. I suppose that is enough for me to tolerate the thing another year (’till we get to haggle over the annual fee again) and I’ll start using it from time to time to see if I can get the credit limit up. I’ve had great luck negotiating reduced APRs with other cards too. In many cases, all you have to do is ask.

    Of course, never pay late. Many will shoot it right up to ~30% APR.

  18. XianZhuXuande says:

    @Thermopyle: Closing a card closes the account. This, unfortunately, is seen negatively in the FICO formula, and it will drop your FICO score (especially if it is a positive ‘tradeline’). It is especially important to keep your oldest tradelines open.

  19. humphrmi says:

    @XianZhuXuande: You are absolutely correct. A credit counselor (long story) explained it to me this way: There is no reporting difference between “We closed the account because this guy’s a deadbeat” and “He closed the account because we were ripping him off.” It just says “Account Closed”, and the future creditor is free to use their imagination why it’s closed. It definitely dings your FICO.

  20. Thermopyle says:

    @XianZhuXuande: So true.
    But then again, I didnt say it wouldn’t affect your credit score. It doesn’t affect the portion of your score based on your credit history. Meghann said closing the card would affect the length of your credit history, which is not true.

  21. Thermopyle says:

    Argh, I meant to say “It doesn’t affect the portion of your score based on the LENGTH of your credit history.”

  22. richerme says:

    After being transferred all over the place and finally getting to speak with a human, Discover offered me a sleek 14.99% to replace my 16.9%. I was underwhelmed! I’ve had the credit card for years, but I have no immediate plans to use it except in the shredder!

  23. XianZhuXuande says:

    @humphrmi: In terms of your FICO score there is no difference whether the card is ‘Closed By Consumer’ or ‘Closed By Credit granter’. In a manual review, this could conceivably have an affect, or might draw some attention, but even then it is usually not a big worry. Having a two-month old AmEx account reading closed by credit granter, for example, would make an underwriter curious.

    @Thermopyle: Your average card lifespan is taken into account. Having a two-month closed card reduces the average lifespan of your tradelines and affects your score. This is certainly a lesser part of FICO, but it is worth taking into account. That’s why it is usually best to ‘sock drawer’ it, use it from time to time for a small purchase and ‘PIF’ (pay in full; the whole balance) when the statement cuts. You can generally keep the line open and improving your score even though you don’t use it. Also, if you decide to close it later, it looks better on review. An obvious exception to this rule would be a card with unreasonable monthly or annual finance charges.