5 Things You Should Negotiate With Your Credit Card Issuer
By Kailey Hagen
We tend to think of credit card terms as being written in stone, and financial institutions encourage this view because it stops people from asking for a better deal. But the truth is credit cards are a very competitive business and companies typically don’t keep their customers for long unless they’re willing to be flexible. Here are five things you can — and should — negotiate with your credit card company.
1. Credit limit
Your credit limit is the maximum amount you can charge to your credit card each month. A higher limit has the obvious benefit of enabling you to charge more to your card, but it has another even more important effect: lowering your credit utilization ratio. This is the ratio between the amount of credit you use each month and the amount available to you.
Lenders typically like to see a credit utilization ratio under 30% and the lower, the better, as long as that number stays above 0%. Negotiating for a higher credit limit will automatically lower your credit utilization ratio, assuming your request is approved and you don’t increase your spending accordingly.
In order to negotiate a higher credit limit, you may have to provide your lender with updated information on your income. You can typically request a credit limit increase online through your credit card account or by contacting the company by phone.
2. Annual fees
Your likelihood of successfully negotiating annual fees depends in part on the type of card you have. High-end travel rewards card issuers probably aren’t going to budge on their annual fee because these cards offer lucrative perks, like free flights, that most other credit cards do not. But for your average rewards credit card, it doesn’t hurt to ask. Your issuer may remove the fee and you could save yourself a little extra money each year.
3. Annual percentage rates (APRs)
Your credit card’s annual percentage rate (APR) shouldn’t affect you unless you’re prone to carrying a balance on your card. If you do carry a balance, your APR is extremely important because it dictates how fast your balance will grow. Your APR depends on your credit score and the range of APRs that card offers. It may also have multiple APRs, like an introductory APR or a balance transfer APR, that are different from the purchase APR. Some cards also charge penalty APRs if you pay late or max out your card.
If you feel you’re being overcharged, contact your card issuer and request a lower APR. If the company refuses, you can always transfer your balance to a new credit card with a lower interest rate to help you pay down your debt more quickly.
4. Late payments
Late payments can be detrimental to your credit score and cost you money. Chronically late payers will probably find little sympathy with credit card issuers, but if this is a first-time offense, your card issuer may be willing to give you a break.
Contact your card issuer when you know a payment is going to be late and explain your situation. Request that the issuer not charge you a late payment fee or report your late payment to the credit bureaus just this once. That way this one-time late payment won’t tank your credit score.
5. Balance due date
When you apply for a credit card, you’re assigned a balance due date, but this isn’t necessarily the most convenient date for your schedule. Most credit card issuers will allow you to adjust the payment due date to whichever time of the month works best for you. Setting your payment due date to right after you get paid could be best if you’re concerned about not having enough money to cover your payments.
Tips for negotiating with your credit card issuer
The most important thing to remember when negotiating with any credit card company is that they don’t have to make any adjustments to their terms if they don’t want to. You have to be firm in your dealings with them, but you also have to be polite. Your card issuer isn’t going to feel inclined to help you if you’re rude and demanding.
It’s best to negotiate your credit card terms by phone where you can make a more personal connection with the company. Before you call, be prepared to explain why you think you deserve the new terms you’re asking for. Highlight your loyalty to the company if you’ve had the card for a while and point out your responsible payment history if you have one. Do some research into comparable cards to see what kinds of rewards and terms they offer cardholders and use this as leverage.
It’s okay to threaten to walk away if the company doesn’t make the changes you’re requesting, but know that it might call your bluff. In that case, you might actually want to make good on your threat to switch to a different credit card.
You could also wait and make your request again in a few months or a year. This might work if your request was denied due to poor credit. If you work on improving your credit score, the card issuer might approve your request in the future. Don’t try to negotiate with the credit card company too often, though. Chances are they aren’t going to change their minds from one month to the next.
You have more power than you think when it comes to your credit card’s terms, but you have to be smart about how you approach it. Know what you want and be prepared to justify why you deserve it. You should also have a backup plan in place in case the card issuer says no.
This content was produced by The Ascent, a personal finance brand by The Motley Fool.
