Want a Lower Rate on Your Credit Card?
Just ask:
About a third of credit-card users have pressed for a lower interest rate, according to a September survey by Synergistics Research Corp. More than 75% of those who asked to pay less said they got their rate reduced. “Card issuers have few choices. They either agree to lower rates or lose relationships,” says Genie Driskill, chief operating officer of the Atlanta research firm.
The steep rise in interest rates led by the Federal Reserve over the past two years has been a boon to credit-card companies and a nightmare to many consumers. The average American adult carries more than three bank credit cards, according to CardWeb.com Inc., a card-research firm in Frederick, Md. Issuers have been particularly aggressive in pushing variable-rate cards, which carry an average rate of 16.6% as of last month, up from 12.5% at the end of 2004. In 2005, 11% of U.S. cardholders at major issuers were hit with interest rates of at least 25%, the Government Accountability Office found, compared with 5% in 2003. According to the GAO report, at least half of cardholders carry a balance; the six major card issuers reported that about half of their active accounts paid no finance charges for most of 2005.
But the interest-rate rise also coincided with a period of fierce competition among credit-card issuers. Last year, Cardweb estimates, credit-card loans reached $745 billion — an increase of 4.8% over 2005, but still far below the increases of five or six years ago. Because it usually costs more to attract new accounts than to hold on to existing ones, many card issuers are willing to sacrifice some revenue to appease upset cardholders.
…If you can’t get a lower rate, you might want to transfer your balance to a lower-rate card — but keep the original card account open, says Curtis Arnold, founder of the Web site CardRatings.com. Closing an account can sometimes harm one’s credit score, he says, by increasing the proportion of one’s total available credit that is being used.
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January 9th, 2007 at 10:06 am