High APR? Don't worry, you can still negotiate

By David Ellis, staff writer


NEW YORK (CNNMoney.com) -- In the never-ending battle between credit card companies and their customers over interest rates, consumers still hold at least some of the cards.

Even as issuers have gotten squeezed by historic loan losses and hogtied by new federal rules introduced earlier this year, experts suggest that card-carrying Americans still have plenty of leeway to negotiate a lower rate.

credit_card_rates.ju.03.jpg
Consumers may have more bargaining power than they think on credit card rates.

"I think [card companies] will be just as willing now as they have been," said Nick Bourke, director of the Safe Credit Cards Project at The Pew Charitable Trusts.

In the past, most cardholders had little difficulty bartering with their bank on their annual percentage rate.

But that seemed due to change after Congress passed major new rules for the industry in February with the CARD Act.

As part of the new law, credit card companies were prevented from practices such as "double-cycle billing" and arbitrary rate increases.

Before lawmakers had even drafted a bill, the banking industry warned Congress that a new law would have dreadful consequences for both issuers and consumers.

"We are deeply concerned that these rules will result in less competition, higher consumer prices, fewer consumer choices, and reduced consumer access to credit cards," said Edward Yingling, chief executive of the American Bankers Association, said during a Congressional hearing in May 2008.

So far, a number of those predictions have come to pass.

Credit card companies started hiking rates last summer in anticipation of tougher new rules, although the industry attributed the rate increase to the risk in lending to strapped consumers who can't pay their bills.

Rates have moved even higher still. As of last week, the national average for a platinum card stood at 11.31%, according to Informa Research Services. Rewards cards stood at 12.33%. Just six months ago, those rates were 10.6% and 11.8% respectively.

But Bourke pointed out that the recent increases are not nearly as severe as those enacted just before the CARD Act was signed into law.

Despite the uptick in rates, experts say issuers can't afford to be completely inflexible with customers looking for a lower rate.

For starters, Americans still can vote with their feet and move their business elsewhere if they are unhappy with the current credit card company. Estimates put the number of different types of cards available to consumers at more than 10,000, according to the payments industry trade publication The Nilson Report.

At the same time, the steady improvement in the economy in the past year has led to some relief for banks who had been weighed down by bad loans.

Industry charge-offs, or loans a bank considers to be uncollectible, fell to 10.91% during the month of April, according to the most recent data published by Moody's. The percentage of Americans that are behind on payments has also dropped in recent months.

With banks no longer intently focused on loan troubles, credit card companies are once again looking to add customers, said Odysseas Papadimitriou, CEO of Evolution Finance, which publishes Cardhub.com, a credit card comparison site.

"With credit losses coming down, what we are seeing is increased competition between major issuers in getting new business," said Papadimitriou, a former executive with Capital One (COF, Fortune 500).

Several issuers contacted for this story, including Bank of America (BAC, Fortune 500) and Discover (DFS, Fortune 500), said they have continued to look at individual accounts to determine if they can offer customers an interest rate reduction.

"We've always been committed to helping cardmembers in need, and that is no different today," said a spokesperson for Discover.

Of course, negotiating a lower rate with a credit card company will not prove easy for everyone.

Long-standing cardholders or those with high credit limits, for example, have typically been among the most successful in winning a lower rate from their credit card company. Industry experts said that probably holds true today.

And while consumers whose credit got dinged by the recession might not fare as well, those who simply kept up with their payments may also be able to talk their way into a lower APR.

"If you are somebody who is paying your bill on time, using your card and carrying a balance, you are a great customer for a credit card company," said Bourke.

Credit card horror stories: Did your card issuer double your interest rate, shut down your credit line or tack on exorbitant fees? Tell us about itand you could be included in an upcoming story on CNNMoney.com. For the CNNMoney.com Comment Policy, click here.  To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.92%3.98%
15 yr fixed3.04%3.09%
5/1 ARM3.10%3.20%
30 yr refi3.93%4.06%
15 yr refi3.05%3.17%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 17,828.24 0.49 0.00%
Nasdaq 4,791.63 4.31 0.09%
S&P 500 2,067.56 -5.27 -0.25%
Treasuries 2.19 -0.04 -1.79%
Data as of 1:26am ET
Company Price Change % Change
Kinder Morgan Inc 41.35 -0.97 -2.29%
Halliburton Co 42.20 -5.14 -10.86%
General Electric Co 26.49 -0.38 -1.41%
Bank of America Corp... 17.04 -0.07 -0.41%
Apple Inc 118.93 -0.07 -0.06%
Data as of Nov 28

Sections

Union-backed demonstrators are protesting outside some Walmart stores Friday, asking the company to pay workers at least $15 an hour. More

From their smartphones, tablets or laptops -- and the comfort of the living room or Thanksgiving dinner table -- Black Friday shoppers could find deals all week that rivaled the in-store doorbusters. More

Natalie's Cakes and More has raised $84,000 through GoFundMe after protests trash store. More

Retailers are promising big deals this Black Friday, but are the savings actually worth the shopping mayhem? Test your deal-sniffing skills. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.