Law requesting lower interest rate?


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Dear Credit Card Adviser,
I read there is a law that allows consumers to request a lower interest rate if they are willing to cancel or pay off their credit card. Is there a statute on this?
— Tim

Dear Tim,
Sorry to break it to you, but there’s no law that entitles a cardholder to a lower interest rate if they call up their credit card issuer and threaten to pay off and close out the card.

“There is no law that requires banks to allow people to pay back less than what they agreed,” says Nessa Feddis, senior vice president of consumer protection and payments at the American Bankers Association.

Of course, there’s nothing written in stone that says you can’t call up your issuer and request a lower interest rate either, Feddis says. You could also theoretically call to see if they are willing to waive a fee, switch you to a different card or increase your credit limit.

If you’re going to make these or other requests, your aforementioned strategy is spot on.

Typically, “the best way to accomplish this is by letting the card company know that you’ll be taking your business elsewhere (or) closing your account if the fee/interest rate is not reduced,” says Ira Rheingold, executive director of the National Association of Consumer Advocates.

The worst the issuer can do is tell you no — and if that happens, there’s not much stopping you from opting for another card that carries a lower interest rate, especially if your credit score is in great shape.

Just make sure to shop around for the best rates before you go ahead and apply for a particular product. Every credit card application will generate a hard inquiry on your credit report, which could wind up dinging your score.

Keep in mind, your issuer is more likely to comply with a request if you’ve been a responsible (and profitable) customer, so you may want to make sure all your spending habits are in line before making the call.

You can take this Bankrate quiz to see how valuable you are to credit card companies, but worthwhile cardholders are generally those who use the card regularly, stay below their credit limit and, of course, make monthly payments on time.

Good luck!

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