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With Credit Card Rates and Fees, It Really Hurts Not to Ask

With Credit Card Rates and Fees, It Really Hurts Not to Ask

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This article was last updated Apr 02, 2018, but some terms and conditions may have changed or are no longer available. For the most accurate and up to date information please consult the terms and conditions found on the issuer website.

As a credit card customer, you have the ability to ask your card issuer to change the terms of your card pretty much anytime you want. Whether that’s requesting a lower APR, a credit limit increase or to remove a late payment fee, it’s perfectly possible your credit issuer will be willing to work with you to make you happy and secure your business.

However, surprisingly few credit card customers do this, according to a March 2018 survey of 1,051 credit card users conducted by CompareCards.com. We found many customers have never requested a lower APR, a fee waiver or a credit limit increase. That’s unfortunate, as most of those who did ask their credit card issuer for a break on fees or requested a higher limit were rewarded for it.

Key findings:

  • Only 25% of credit card holders have asked for a lower Annual Percentage Rate (APR) on one of their credit cards
  • 60% have never called to have a late fee waived
  • Only 40% of credit card users have asked for a higher credit limit on one of their existing cards

This, despite the relatively high success rate for customers who did ask for changes in each of these credit card terms:

  • 64% of those who asked for a lower interest rate reported receiving a lower APR. On average, the reported rate reduction was by 5.5 percentage points
  • 89% of users who asked got at least one late fee reversed
  • 64% of those who asked for a higher credit limit received one. On average, they reported being extended $2,059 in additional credit

Not everyone in our survey may have needed a waived late payment or higher credit limit. But if they did, and didn’t ask, they may be leaving behind money or additional credit that’s only a phone call away.

Lower my rate, please

The average Annual Percentage Rate (APR) on general purpose credit cards was 17.2%, according to a 2017 Consumer Financial Protection Bureau report, and will only increase as the Federal Reserve continues to ratchet up short-term interest rates.

You shouldn’t be shy about asking to have your APR lowered. There are any number of reasons why you might be entitled to an APR reduction without even realizing it. For example, your credit score may have improved from when you first received the card. You may have paid down a lot of debt, or your credit score might have seen a boost because your credit history is simply longer than it was when you first applied for the card.

You have another bargaining chip on your side as well: your business. Banks don’t want you to flee their business for a rival offering from another bank. If you carry a balance on your credit card and you’re considering taking advantage of another bank’s balance transfer offer, your current bank may consider lowering your rate to secure your business.

Most likely, banks won’t extend a lower APR unless you ask for one first.

In our survey, only 25% of credit card users said they ever asked for a lower APR. Even allowing for a significant amount of the population who doesn’t maintain a balance on their card, that still means a significant percentage of the population who does have a balance isn’t asking.

 

As for those cardholders who asked, 64% said they received a lower rate. These users reported lowering their APR at an average of 5.5 percentage points. For a card with a $5,000 balance, reducing an APR from 24.9% to 19.4% results in an annual savings of around $275.  

Although the survey didn’t ask, another option for these users would be to transfer that balance to a low- or 0% APR balance transfer card. Generally, these cards will offer a low introductory APR rate for 12 to 18 months. However, there’s often a balance transfer fee that ranges from 3% to 5% of the balance. For those fees, transferring a $5,000 balance costs $150-$250 initially, but you’ll save more over the longer run. For example, transferring that $5,000 from a credit card with a 24.9% APR to a 18-month, 0% introductory APR balance transfer card saves $1,717.50 in interest over those 18-months, after taking into account the $150 transfer fee. You can use this calculator to do your own math on any balances you may have.

Waving goodbye to late fees

Only 59% of credit card users who had a late fee have ever asked to have it waived, even though 89% of them succeeded in getting at least one late fee reversed. That’s a typical savings of up to $38 dollars per incident, according to many credit card terms in 2018.

A request for credit is often extended

The pattern continued when we asked credit card users if they ever asked for additional credit on at least one of their credit cards. Only 40% reported asking. However, among those who did ask, 87% said they succeeded in receiving a higher credit limit.

There are many reasons it may make sense to request a higher credit limit. You may want to dedicate your spending to this credit card and securing a higher limit gives you the room you need to charge daily expenses regularly. Also, by increasing the amount of credit available, you can improve your credit utilization rate. That’s how much debt you carry on credit cards vs. how much debt is available to you. The lower your rate, the better your credit score will be.

The key here, of course, is to get that credit limit increase but resist the temptation to immediately max out that card. That will only hurt your credit.

Most still use the phone

Finally, we were a little surprised that, despite the text- and email-based world we live in, most credit card users used a quaint way to get their issues sorted out – they spoke over the telephone. Some may have even used landlines.

 

People’s credit situations are fluid. Over time, they often change for the better (Indeed, the average FICO score for Americans hit 700 for the first time last year). And perhaps your needs have changed, and now need a different type of rewards card that better aligns with your current spending. Or it could simply be that you now need additional credit — more than your card issuers currently extend to you.

Methodology

CompareCards.com by LendingTree commissioned Qualtrics to survey 1,051 Americans who have at least one credit card about interactions they have initiated with credit card issuers. The survey was fielded March 20, 2018.

 


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