Credit Cards and Rate Cut: Time to Negotiate

Posted by: Michael S. | Mar 24,2008


Everyone probably knows now that there’s been a cut in the interest rate as a way to stimulate the economy.  In a time of economic uncertainty it wouldn’t be surprising if a lot of people are frozen in place economically.  Thought he cut in the prime rate is designed to spur on economic activity, people might be afraid of making big economic decisions in this climate.  

So start small.  One of the advantages of the cut in the prime rate is it gives you some negotiating power with credit card companies if you are currently in a variable rate plan.  Variable rate plans have dropped a whole percentage point due to the rate cut.  The average is from 14 to 13%.  If you have a variable rate card, you may think there’s nothing you really need to do.  

This isn’t true.  For variable rate cards, it may take three months or even longer for the rate drop to take effect.  That’s three months of a whole percentage point of interest being added to your credit card bill.  What are you waiting for?  Call your credit card company and negotiate for the lower rate to be instigated immediately.  

Fixed rate cards do not have it so easy, but negotiation is still a possibility.  The same is true for both variable and fixed rate credit cards: if you have a good history with the credit card company, you’ll be in a better place to negotiate.  If you’ve defaulted time and again, you can’t be surprised if a credit card issuer refuses to lower a rate.  The least you can do is try, and now that interest rates are lower, credit card negotiations could work in your favor.  

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