How consumers can negotiate a lower annual percentage rate

Consumers are always looking for ways to save money, and one easy way to do it used to be as simple as calling a credit card company and asking for a lower APR.

Back in 2002, 56 percent of credit card holders that called their issuers to request a lower rate got one with a single phone call, according to a report from the financial advice website Mint Life. Obviously those days are gone, but that doesn’t mean a company will never lower a borrower’s rate if they ask.

The trick is in negotiation. If consumers arm themselves with a bit of knowledge beforehand, they might be able to talk a lender into lowering their APR, the report said. Consumers should know their credit score, and whether their report is clean and free of errors, and then get their financial paperwork together. Some lenders may want additional paperwork that doesn’t show up on a credit report before lowering a rate, like proof of employment and income.

It’s also important to try to formulate a backup plan, the report said. Even consumers with great credit may find that the lender will deny their request, so they should be prepared to take their balance with the company that denied them and transfer it to another card, since the lender will be more likely to extend a lowered rate if they think they will lose business.

There are, however, risks. The report noted that if a consumer is denied, it’s very possible that their credit score will drop as a result. Calling lenders with the intent of lowering an APR will force them to look deeper into a consumer’s account and credit history, and, in some cases, to demand more paperwork. And if the company doesn’t find that the consumer has a good enough score to warrant a lowered rate, it is within their rights to lower the credit limit on the account in question. Not only will this hurt the account, but also the consumer’s credit score.

Even those that can’t get their APR lowered might find their lives made easier thanks to the Credit Card Accountability Responsibility and Disclosure Act. A recent MSN report said that any increase to the APR must be evaluated every six months, which includes any increases since January 1, 2009.