If you have great credit and an interest rate of 9 percent or higher, shop around and then call your issuer to bargain for a better APR. Curtis Arnold, founder of CardRatings.com, points out that several issuers are advertising rates better than 9 percent and 10 percent, which are themselves attractive rates. Simmons Bank offers a card with an APR at 7.25 percent, for instance, while IBERIABANK offers a card with rates from prime minus 1 percent to prime plus 1 percent.
Also see if your variable-rate card has a floor, or a minimum rate. If the prime rate plus the margin or spread comes to less than the floor, you won’t benefit from the prime rate reduction. Issuers may institute a floor on cards that don’t have them, so make sure you read mailed notices indicating a change in terms for mentions of a floor.
“You should basically see a reference to it in how they compute the interest rate — the prime plus whatever margin they add to that, but then after it’ll say ‘with a minimum rate’ or ‘no lower than’,” says Arnold.
If your rate doesn’t come down within three months, a floor could be the culprit. At that point, you need to call your issuer to find out what’s going on, says Arnold.
“If there is a floor, I would complain and threaten to take my business elsewhere. In this environment any kind of complaint from consumers is usually taken pretty seriously.”
If your issuer won’t work with you,
transfer your balance to a card without a floor rate.
Search for competitive offers before calling your issuer.
Understand that issuers may take back the benefit of the rate cut later on, due to
risk-based pricing and market concerns. Your best defense:
Keep your FICO credit scores in the 700 range, negotiate rate increases with your issuer and if that fails, check out the competition.
If you have a question about a particular credit move,
research its impact on sites you trust, suggests Adam Levin, CEO of Credit.com.
“I do think most Americans are going to get the benefit of the rate cuts, but there’s enough exceptions out there that a significant number of consumers — when I say significant, we’re talking potentially millions of consumers — are not going to see the benefit, or they’re going to see the benefit three months from now, or they’re going to see the benefit temporarily and then have the rate on their account jacked 10, 15 basis points and they’re going to be in a worse-off situation,” says Arnold.
Watch for better offers you can use as leverage to get a lower rate. Because more and more issuers use risk-based pricing, cardholders should maintain high FICO scores.