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Should You Request a Lower Credit Card Interest Rate?

By John Rasor

Republish: EasyPublish™
Published: 03Aug2009
Word count: 405
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Not unless you can't meet the minimum payment with your current interest rate.

Prior to the credit crisis, consumers were advised to request lower rates as a reward for their good credit history, but with the turmoil going on in the credit card industry right now, asking could backfire.

Any time you ask for a change in terms - be it a rate reduction or a credit line increase - the credit card issuer will pull your credit report. They will also ask for additional information such as your monthly income, employment history, etc.

If your credit scores have been falling due to the closure of inactive accounts or the reduction in your credit limits, then your request could trigger an increase in your interest rate rather than a reduction. And of course, this inquiry on your credit report could bring your scores down yet another notch.

Even the most responsible, creditworthy consumers are seeing their credit scores fall because of these actions on the part of credit card issuers. It is no reflection at all on your ability to pay or your money management practices, but since creditors look at your scores, you could suffer for it.

If you're having trouble, but will struggle through somehow, you shouldn't let on to the credit card issuers that you're having difficulties - and you shouldn't ask for a change that will cause them to examine your current financial status. They will react with further reductions in your credit limits, and that's something you might not want at the moment.

If you truly can't meet the minimum payments, that's another story. In that case you should call and you should ask.

Credit card issuers do want to keep you in a position to keep paying, so they are in most cases willing to work with you. According to the Nilson Report, about 2.7 million credit cardholders got some kind of debt relief in 2008. That help included settlement, temporary forbearance, debt consolidation, a payment plan, or an interest rate reduction.

Interestingly, a Synergistics study in January showed that about two-thirds of those consumers who received a change in terms had difficulty making payments as a result. So while it was probably their adverse actions that caused you to be unable to meet the minimum, after you're in trouble they'll offer help.

Whether you're in trouble or not know what's on your credit report. You can bet your creditors do!

http://www.creditscorecowboy.com is the #1 source on the planet for a free credit report, identity theft software and a blog with a wealth of information writtten by lending professionals that know about credit and what determines ones creditworthiness.

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