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When was the last time you called your credit card company and asked them to reverse a late fee or lower your interest rate?
If “never” is your answer, you’re in the majority. Only one in five respondents to a new survey by CreditCards.com said they had ever made such a request. And yet, 89 percent of those who had bothered to call about a late fee succeeded in having it reversed, and 78 percent were able to get a lower APR.
“Most people don’t ask for breaks for one reason,” CreditCards.com lead analyst Matt Schulz said. “They don’t think it will work. But people have more bargaining power than they realize. They just need to be willing to use it.”
It’s a buyer’s market. Credit card companies are competing with one another to gain and retain customers. And, adds Schulz, it’s a lot less expensive to retain customers you already have.
Late-fee forgiveness is one way to do that. As companies like Discover advertise late-fee forgiveness on the first late payment, other companies have begun to follow suit.
Schulz points to the 2009 Credit Card Act to explain. The Act restricted credit card companies’ ability to hike rates for any reason, at any time. Brian Riley of research firm CEB speculates that in response to the law, many credit card carriers hiked their interest rates from the start to allow for more flexibility going forward. Now, card carriers have plenty of room to move rates down.
The survey also revealed African-American cardholders were less likely — at 33 percent — to report a successfully lowered interest rate compared to white customers, who were successful 81 percent of the time.
Schulz did note that the sample size of African American cardholders was too small to draw any formal conclusions from the data. But it’s not the first research to show such disparities. A report by the NAACP and the left-leaning policy center Demos shows that African Americans face steeper annual percentage rates to begin with — 17.7 percent on average — in comparison to white cardholders — 15.8 percent on average.
Black households on average have fewer assets to fall back on than their white counterparts. As a result, they may have to borrow more often than white households, and therefore appear somewhat riskier, Demos senior analyst Amy Traub said.
Customers under age 30 were also less likely — at 36 percent — to successfully negotiate lower interest rates. Meanwhile, older customers had a higher rate of success; those between 50 and 64 lowered their interest rates 81 percent of the time.
“Age 30 might be the magic age,” Schulz said. Credit card companies are less willing to negotiate with those with limited credit history.
In addition, the Credit Card Act required those applying for credit cards under 21 to submit proof of income or cosign with a parent. The purpose was to protect students without an income from signing up for credit they cannot repay, but the law may have also prevented a large number of twentysomethings from building up more credit history, Schulz said.
So what should you do if you want your late payment fee waived or if you would like a lower interest rate?
“Just make the call,” said Schulz. “It can’t hurt to ask.”
But, he advises, if you are going to negotiate lower rates, “come armed with [other credit card] offers.” Whether you find them online or it’s an offer sent to you through snail mail, those offers can establish the baseline for negotiations.
Kristen Doerer is the digital reporter-producer for PBS NewsHour’s Making Sen$e.
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