Ask for a lower APR; you just might get one

Dear Opening Credits,
When is it possible to get a lower interest rate, and do creditors ever raise the interest rate if the person is not in default?   – Joseph

Dear Joseph,
So you want a better APR? Great! Have a long and responsible history with the account in question and make sure your credit scores are impressive.

According to a 2016 CreditCards.com poll, those who ask for better card terms receive them, but very few even bother to ask. So the odds are in your favor, provided you have a good score, a solid payment record and are in overall good standing with your issuer.

First, you need to know where you stand. To get your FICO score, visit the company’s website. Each credit report (TransUnion, Experian and Equifax) sells its own score, and they’re about $20 per report, though some credit card companies offer free FICO scores to their cardholders. As for VantageScores, they are free through various providers.

Once you’ve checked your credit scores, you’ll have a decent idea of how current and prospective creditors will perceive you. If your scores are in the good-to-excellent range (700 and above) and you appear to be a creditworthy individual, you can use that status to your advantage. Give the issuer a call and ask if you qualify for a lower rate based on your credit scores. If you’ve always paid on time and have kept the balance low, mention that. Most credit cards advertise a range of interest rates for new applicants. Check out your card’s APR range online to compare your current APR and to get an idea of how low the issuer can go with its APR.

In the event you’re denied, consider applying for a balance transfer card. Although there is usually a fee of 3 percent of the amount you shift over, many issuers waive interest altogether for over a year. The interest rate after that may be less than what you may have now, too. If a balance transfer card interests you, review the many offers available, then decide on one you most want and probably qualify for before applying. You don’t want a bunch of unnecessary inquiries on your credit report, as they will negatively impact your scores.

Related: Missed credit card payment shows the wisdom of separate accounts.

If you’re not appealing to credit card issuers because your rating is low at the moment, give yourself a credit score makeover. All credit scores are developed from the data listed on your credit reports, so ensure that your information is attractive:

  1. Send all payments by or before due dates.
  2. Slash your debt. Aim for zero, but if you can reduce it to less than 30 percent of your credit limit, that will help.
  3. Don’t apply for credit products until your scores are where you want them to be.

By following this simple plan, you should see major improvement in six months to a year.

Regarding credit issuers raising the rates on accounts you already have, they may, and you don’t have to be in default. Yes, being delinquent often will result in an interest rate hike, but it’s not the only reason. For example, if your card has a variable rate and the prime rate goes up, so will your APR. Or if you’ve had the credit card for a year, the issuer can re-evaluate your creditworthiness.

If your credit is not as impressive as it was initially, the issuer might raise your rate — though you have to be given a 45-day warning of the change. After that first year, rate increases are possible if your credit rating tanks, but only on future transactions and with the 45-day advance notice.

Related: How to fix credit after dad opens card in son’s name.

Mind that you can always charge without any interest fees being applied to the purchase. Just use the card and pay in full when the bill is due. If you don’t roll balances over to the next month, it won’t matter what the card’s interest rate is. You’ll enjoy a short-term loan with a guaranteed 0 percent APR. Another benefit: Your credit scores will naturally rise, making you more eligible for the very best rates on other credit products.

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