Its Possible To Negotiate A Lower Credit Card Rate

Jeanette A. Tucker  |  12/2/2005 3:03:15 AM

News You Can Use For December 2005

An estimated 55 percent to 60 percent of Americans carry credit card balances. The average household with a credit card balance carries a revolving debt load of nearly $8,000. A recent study found that nearly half of those households with balances paid the minimum payment.

"This means that about one of four cardholders in the United States now makes only the minimum payments on their credit card balances," says LSU AgCenter family economics professor Dr. Jeanette Tucker.

"Cardholders paying only the minimum payment accumulate interest on top of interest, paying far more than their share to credit card companies," Tucker points out.

The family economist offers this example: If a cardholder pays the 2 percent minimum payment (or $20, whichever is greater) on that $8,000 average credit card balance at 12 percent annual percentage rate, it will take more than 25 years to pay off the balance. The cardholder would pay more than $15,400 in interest during this 25-year period.

A Federal Reserve Survey of 2,000 credit cardholders found that 81 percent considered the annual percentage rate (APR) on their credit cards too high. In response to these shocking statistics, state Public Information Research groups conducted a survey to investigate how one simple action can help consumers lower their credit card interest rates and save themselves hundreds or even thousands of dollars.

Volunteers participating in the study contacted their credit card company and requested a lower APR. The results from a national spot survey of 50 consumers were the following:

  • With one 5-minute phone call, 56 percent of consumers who called their credit card company lowered their APRs.
  • Those who were successful reduced their APRs by an average of more than one-third, from an average of 16 percent to an average of 10.47 percent.
  • Three consumers were able to reduce their APRs by 15 points.

The survey results also showed a correlation between the cardholder’s credit history and the likelihood of receiving a reduction in the APR.

Factors affecting the caller’s success rate were:

  • Length of time with a particular card (longer is better).
  • Credit limit on that card (a higher limit is better).
  • Unpaid balance-to-limit ratio on that card – how "maxed out" the cardholder is (a lower balance, making a lower ratio, is better).
  • Unpaid balance-to-limit ratio on all cards (a lower balance is better).
  • Number of times an individual missed or paid late on a loan or a card other than the one for which they were calling (fewer is better).

Tucker says this study suggests that in today’s highly competitive market, many credit card issuers will reduce fees and interest rates, upon request, to attract or maintain the business of customers with good credit histories. Consumers are encouraged to gather information, think through the issues and calmly and rationally justify their request to lower their APR. This action can save hundreds or thousands of dollars.

For information on related family economics topics, click on the links at the LSU AgCenter home page, at For local information and educational programs, contact an extension agent in your parish LSU AgCenter office.


On the Internet: LSU AgCenter:
Contact: Jeanette Tucker (225) 578-5398, or

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