Want -- or need -- a lower rate? Try asking

If you're looking to sign up for a new credit card, you can seek out ones with the lowest interest rates and only apply for those. But what can you do about your rates on existing credit card accounts? Depending on your situation, you may be able to re-negotiate the terms of your card.

It all depends on why you want the change and what kind of credit card customer you are, says Jeff Schwartz, executive director of Consolidated Credit Canada. You've agreed to the terms and conditions of a card, he says, so approaching the issuer because you want to change the rules of the game might not get you the lower rate that you want. negotiate-interest-rate

"If you just go in saying ‘I want to lower my interest rate,' I'm not sure that's a very good strategy," Schwartz says. This is especially true if you are a new customer or one who is often late or behind on payments. But it could still be worth a shot if you have been a longtime, loyal customer who has an impeccable repayment history.

Additionally, there are certain circumstances that would warrant asking for a lower rate. If you're going through a rough patch and will have trouble making ends meet, asking for a break on your interest rates so that you can maintain your good standing with the company might work.

Either way, you must be a good credit card customer.

"You want to be a consumer that's in good stead with your issuer," Schwartz says. "Somebody who's paid their bills in full on time, never been late, managing your debt in a responsible way."

How to ask for a lower rate
When you call your credit card company, know what you want to say, and frame it by what's important to the company, Schwartz says.

"You're saying, ‘My situation has changed, I'd like to look at perhaps reducing my interest rate so I can still be on side with you and maintain paying my credit card bills,'" Schwartz says.

He also says to indicate that the rate reduction is a temporary fix to get you through a tough financial bind. Give them the reasons your budget is tight, Schwartz says. "In many cases, the creditor sides with that," he says.

If you are calling hoping your issuer will reward you with a lower rate for good behaviour, explain how long you've been a customer and state that you have never missed a payment or paid late.

"You have nothing to lose," Schwartz says. "They can say no, but for those that say yes, it could be a benefit."

What you should do if you're unsuccessful
Of course, you might not be successful in getting a lower rate, regardless of how flawless a customer you are. If you don't get what you want, be prepared to move toward a different offer, Schwartz says.

Credit card companies will often send offers in the mail for cards with lower interest on balance transfers. Even if you don't get a 0 per cent balance transfer offer, there's a chance you could transfer your balance to a card with a lower interest rate than your current card.

In fact, if you mention in your call that you're considering transferring your balance to another bank's card, it may tip the scales in your favour if your issuer is on the fence about lowering your rate. Issuers don't want to lose customers. It's not a guarantee you'll get a lower interest rate, and you shouldn't be aggressive about it, but it's a strategy that may work.

However, if you follow through with a balance transfer, be sure the math checks out to be a good solution for you. Don't forget to account for any balance transfer fee.

"If you're taking a sum of money where you're paying a higher interest rate and moving it to an account with a lower interest rate, mathematically that's a wise thing to do," Schwartz says. But, he adds, consider what you're signing up for. You want to make sure that the transfer is going to be advantageous to you in the long run.

"Often, these introductory rates are just that - they're rates you can get for a short period of time," he says. If you haven't paid the balance off by the time the promotional period ends, or at least made a substantial dent in the balance outstanding, you haven't really helped yourself.

If you don't want to take on a balance transfer, you might wait a few weeks and try calling your issuer again. Sometimes simply having a different customer service representative can help you get the "yes" you're looking for.

In the meantime, keep paying your bill on time and pay at least the minimum (though preferably more). Keep your balance as low as you can, aiming to use no more than about 30 per cent of your total limit.

Finally, and perhaps most importantly, don't get belligerent with the customer service representative. Getting a lower interest rate is a privilege, not a right, and politeness will get you a lot further than rudeness.

See related: Why and how you should ask for a credit limit increase, How to get your bank, creditor to reverse your fees
Updated December 26, 2016

Most recent Low Interest / 0% APR Cards Stories