Ask Andy: Credit card "script" to lower your rate - WMC Action News 5 - Memphis, Tennessee

Reported by Andy Wise

Ask Andy: Credit card "script" to lower your rate

By Andy Wise - bio | email

MEMPHIS (WMC TV) -  Here it is!

Hi, my name is ____________.  I'm a good customer, but I have received several offers in the mail from other companies with lower annual percentage rates.  I really want a lower rate on my card.  Can you help me?

This script has helped many consumers drop their credit card APR's. I've encouraged a half-dozen folks here in the Mid-South to use it, and they saw their interest rates drop anywhere from two percent to 10 percent!

But as I have reported, some credit card companies aren't as willing to budge on this as they have been in the past. You can thank our lousy economy for that. 

With the new CARD Act now the law of the land, your credit card company may be more inclined to lower your rate, especially if you are a long-term, well-paying customer who still carries a semi-chunky balance.

If you try it and it doesn't work, don't be discouraged. Ask for the customer service agent's supervisor, then repeat the script, word-for-word.  Remember, you have to be a customer in good standing.

Be grateful for these new provisions under the federal CARD Act:

* BANS RATE HIKES IN FIRST YEAR. If you already carry a credit card, you shouldn't see any fine print about rate hikes until next year. After this first year of the new law, card companies can only apply new rates to new purchases.

* BANS OVER-LIMIT FEES. The exception is if the consumer has purchased overdraft/over-limit protection. In those cases, if a consumer attempts to overdraft or go over a credit limit, the card company can automatically decline the transaction. The over-limit ban should go well with new Federal Reserve rules banning overdraft fees on ATM withdrawals (see this Ask Andy story:

* BANS DOUBLE-CYCLE BILLING. Credit card companies can no longer carry finance charges over more than one billing cycle.

Bill Hardekopf, my good friend and CEO of, listed some "unintended consequences" of the law's provisions:

* Since issuers will be unable to raise interest rates on new accounts for twelve months, they simply raised the advertised APR before February 22 so it affected everyone shopping for a new credit card account. According to the Complete Credit Card Index ( ), the advertised Annual Percentage Rates for credit cards averaged 13.46% last week. Six months ago, the average was 12.11%. One year ago, the average was 11.51%. 

* People under 21 will find it harder to build up their credit score. If they do not have a job with enough income, they must get an adult to co-sign. Many young adults will not take this extra step, losing out on the opportunity to build up a good credit history throughout college. Without a positive credit history, they may not receive as good an interest rate on their first house or car loan.

 * Fees, fees and more fees. Issuers are introducing more cards with annual fees, increasing existing fees, and putting new fees on accounts. Last October, Bank of America notified a small percentage of their customers that it is adding an annual fee of $29 to $99 on their accounts beginning in February. Balance transfer fees, which have been at 3% for most issuers, have now been increased to 5% by Chase and Discover. Fifth Third Bancorp recently added a $19 inactivity fee if your card is unused for a twelve month period. 

* The scarcity of fixed rate credit cards. Most issuers switched their fixed rate cards to variable rates, since the CARD Act allows APR increases in variable rate cards if the index used to on calculate that variable rate increases. As an example, if the index for a variable rate card is tied to the prime rate and the prime rate increases by 1%, the APR on that card can increase 1%. Many issuers switched their fixed rate cards to variable rate cards so they could maintain their margins once the CARD Act was instituted. 

* Since any amount above the minimum monthly payment goes toward the balance with the highest APR, some issuers raised the minimum payment up to 5% on a number of accounts. 

* A decrease in the amount of credit card rewards or cash rebates. Reduced rewards could come in several different forms: (1) a cutback in the payouts of cash back cards; (2) more miles or points needed for that free airline trip or hotel stay; or (3) higher tiers required for consumers to receive the same level of rewards. 

* A decrease in the number of credit cards awarded by retail stores.

* Providing proof of income when applying for a credit card will make it significantly harder for consumers to instantly qualify for a credit card. This will certainly impact the marketing efforts of the 10-15% discount on a purchase if you sign up for a store's credit card. Retailers rely on this marketing strategy to increase purchases and to build their mailing list of customers used for offering future coupons or early-bird discounts.

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