How to get the LOWEST possible APR on your Credit Cards from an Industry Insider
Mar 25 '00 (Updated Oct 08 '00)
As an employee of one of the top issuers of credit cards in the world, I can offer you some hints on how to obtain the lowest possible rate from your credit card issuer. There is no trickery involved, it's just knowing what the system is, and how to work it to your benefit.
This review will not encompass Promo Rates, but rather the normal APR on the account.
For a comprehensive guide on Promo Rates please see my epinion:
http://creditexpert.epinions.com/finc-review-73A7-381984A-38D194D4-prod4
We can divide the topic of how to get the lowest APR into two parts: The cards you already have, and the cards you are considering. With the cards you already have it's all about Usage, Track Record, and Retention.
Usage & Track Record
What makes you pull out a certain card from your wallet and use it? If you're like the average consumer, it's a variety of reasons:
• The way it looks
• The way you feel about the company
• It happened to be the first one your grabbed out of your wallet
• You get some kind of rewards for using it
• They sent you some access/convenience checks
Your credit issuer is doing everything they can to make sure that when you use a card you choose theirs. How often you use the card, whether or not you revolve your balance, and your account history are always being evaluated into a "behavioral score" with your credit card issuer. These scores are not the same as your credit bureau scores, but rather are internal bank business records. Each bank has its own system. Generally, the higher your score, the more valuable you are as a customer. The scoring is a computerized matrix. The best influence you can have on your score is to behave! :)
• Pay on time.
• Do not go Overlimit.
• Use your card. (You do not necessarily have to revolve a balance to obtain a high score, but use the card)
• Be a long-term customer.
• Keep your other accounts in good standing
Without a good score, you will not have any leverage with your credit card company. In fact, if your behavior is decidedly bad, be advised that many credit card companies have a policy of "risk pricing" and may actually raise your rates. Of course, when they try to raise the rates they will give you an opportunity to agree or disagree, but it's "my way or the highway", so take care of your credit!
Retention
Your credit card company is very interested in keeping you on as a satisfied customer. Why? Because competition is fiercer than you can imagine among credit card issuers. The more business they have, the more business they can attract and the more money they will make.
Every credit card issuer has a special department that is for the sole purpose of retaining customers. Sometimes it is called Retention, but more often than not it has a more soft and friendly name. Many times you will not even know that you are being transferred there, but getting there is our goal in order to obtain the lowest rate possible. Retention has the most power to impact your APR and they will do it on the spot.
Getting to Retention Trek to APR Central
Generally, you will not make much headway in getting an APR reduction from the normal customer service representative. Our goal is to get transferred to the retention department. Keep in mind, that some companies do not have representatives working in their retention area 24 hours a day. The best odds will be to call during normal business hours. There are certain key phrases you can use which will get you on the fast track to retention:
• "I just don't want to use this card with this kind of APR! Ugh! I don't even like to carry it in my wallet!"
• "I'm thinking of closing my account because the APR is too high."
• "I'm thinking about transferring my balance to (insert name of rival bank) because they have a much lower APR."
• "My neighbor just got a great offer from you! Can I get that on my account too?"
• "I've been a customer with you guys for a long time, but this APR has got to go. I've seen lower rates everywhere!" (be prepared to state examples if necessary)
***It is very important not to back yourself into a corner if you do not really want to close the account!*** Depending on your behavioral score (and you have a basic idea if you've been naughty or nice) they may just take you up on your offer to close the account. If this is your only account and you really need it, you're not in a good position to play hard ball!
At this point, the representative has looked over your behavioral score (or the computer has done it for them) and, if applicable, will transfer you to retention to save the account. If the representative tells you there is nothing they can do, insist on being transferred to Retention. Just go on and ask for it straight up, it might get you there.
Retention Strategies Eyes on the Prize
Once you get to retention, be friendly, but concerned. Tell them you really like using this card, and you want to stay with the company, but how can you with all these great offers all over the place? It is especially helpful to play off one bank against another. "Man, I just got an offer for 9.99% from Bank X, can't you at least match that?"
• Do not be swayed by low promo rates
Remember, this is about a lower APR for the long term. In general, the lowest rate you can expect will be a 9.99% - 12.99% fixed rate. If you can get this, you've done a good job. :)
• Do not pay an annual fee
There is no reason to pay an annual fee in this day and age for a credit card. Period. If you are interested in a rewards or points program, you will probably not be able to negotiate a rate.
Strategies when you are applying for a New Card
When you call into a credit card company for the purpose of applying for a card, the representative has a lot of leeway. They can choose which card program you are applying for, which will in turn drive the APR. Be friendly and polite. Get them in your corner. Generally they will not be allowed to "rate shop", but all of them know what the lowest rate programs are. Remember, representatives in customer service generally hear complaints all day. When was the last time you called your credit card company to thank them and let them know that you used your card and it worked fine? A little bit of kindness and will take you a long way (and save you money).
- Transferring a balance
This may help you obtain a lower rate, but remember, your goal is a long term low APR, not a short term promo rate, so make this clear to the representative you speak with.
- Pre-Approved Offer
If you have received a pre-approved offer, you will almost certainly have to accept the terms as stated in that offer to remain pre-approved.
- Where to look for the lowest rates
Here are a couple of web sites that allow you to compare existing credit card rates. Some of the banks listed are pretty obscure. Take care not to apply for a whole bunch of cards at once, a lot of inquiries on your credit bureaus will hurt you in your quest for credit.
• http://asque.com/creditcards/ccir1.htm
• http://www.cardratings.com/rankings.html
As a consumer, you have the biggest bargaining chip of all, your business . By using it wisely and to your advantage, you can obtain the lowest possible long term APR on your credit cards.
Here are some additional reviews on the topic of Credit Cards which may interest you:
• An Insiders Comprehensive Guide to Avoiding Credit Card Fees
http://creditexpert.epinions.com/finc-review-7D30-14D8F7F-3894936A-prod2
• Establishing Credit: Tips from an Industry Insider
http://creditexpert.epinions.com/finc-review-69E0-6DFB00-38BEFECC-bd3
• What You need to know about your Credit Reports, from an Industry Insider
http://creditexpert.epinions.com/finc-review-48BA-E0702A-3887950A-bd1
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Epinions.com ID:
netKat
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Member: Kat
Location: Maryland
Reviews written: 166
Trusted by: 887 members
About Me:
Analytically inclined mom, bank officer, freelance writer, and internet addict.
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