A common misconception in the world of credit cards is that the card holder doesn’t really have much leverage when trying to negotiate interest rates for a credit card. In fact, this view is so prevalent that most people do not even try to negotiate the interest rate for a credit card, meaning that they may be completely passing up on an opportunity to help save money. Although it may be contrary to popular opinion most card holders actually have a good deal of leverage when negotiating the interest rate of a credit card.
A majority of a card holder’s leverage when negotiating interest rates from a credit card comes from the fact that the car holder has other options and doesn’t have to accept what the credit card company is giving them. If a card holder has a 6% interest rate on a credit card but keeps getting offers from other companies for cards with lower interest rates he or she has no reason to remain with the company that will not lower the interest rate. Most credit card companies appreciate loyal customers that always pay on time so more often than not if you call up a representative and ask for a lower interest rate your request will more than likely be honored.
Your balance with the credit card company can also provide you with a good deal of leverage in negotiations. If you call your credit card company and try to negotiate a lower interest rate with a high balance that the credit card company knows you won’t be able to pay off all at one time chances are your request for a lower rate will not be received with as much objectivity as it would be otherwise because as long as you have a balance the credit card company isn’t at risk of immediately losing your business.
While most card holders do have plenty of leverage when negotiating interest rates for a credit card there is a certain group of card holders that may not have as much leverage as the others. These card holders are generally the ones that have a tainted history with the credit card company. This includes card holders that may have slipped into default, card holders that have a history of missed payments or card holders that have already negotiated for an interest rate reduction. If you are not in favorable standing with the credit card company chances are they will not feel like it is in their best interest to negotiate with you. This is especially true if you have already slipped into default because then there is really no reason for the credit card company to reduce the interest rate because it in no way will benefit them. A card holder in default can threaten to take his business elsewhere all they want but at that point their business doesn’t mean much and they are already legally obligated to pay the credit card company their money back, including the high amounts of interest.