NEW YORK (MainStreet) — Nearly nine out of ten credit cardholders who asked their credit card issuers to waive a late payment fee were successful, according to a new CreditCards.com report. Sometimes, it really is just as simple as asking.
Another two-thirds of cardholders who asked for a lower interest rate were approved, saving hundreds of dollars annually. While consumers will spend ages looking for a good deal online, many miss the obvious choices to save money. Only about one in four cardholders have put in such a request, and that means many Americans may be missing an opportunity to save real money, said Matt Schulz, CreditCards.com’s senior industry analyst.
The problem is that only 28% of American cardholders have asked their credit card issuer to waive a late payment fee and only 23% have requested a lower interest rate.
Late payment fees typically average $25 the first time it occurs, while subsequent fees can are $35, Schulz said.
“We were surprised with the rate of success,” he said. “There are not a lot consumers who are asking their credit card companies. People don’t do it, because they don’t realize how likely they are to be successful.”
In terms of lowering your annual percentage rate, or APR, if you're paying 20%, it is perfectly "reasonable" to ask for the average rate to be bumped to the average of 15%, Schulz said. Chances are, your wish will be granted.
“That is a big movement,” he said. “That is real money.”
Not the Gift That Keeps on Giving, But Now Is Prime Time
Consumers should only ask the issuer to waive a late payment fee or lower the APR once a year. Although it would not hurt to ask twice, it may not yield additional results since the issuer could note the request on the account, Schulz said.
That said, now is the time to ask. Issuers are more likely to say yes to requests to waive fees and lower interest rates currently, because the industry is so competitive right now and consumers are making more purchases, Schulz said. Current data from the Federal Reserve is showing that banks are easing their lending standards and delinquencies are down, making it easier for consumers to obtain credit.
“It’s probably the best time in years to ask credit card issuers for a break,” Schulz said. “Americans are pulling out their plastic again. Banks are loosening their grip on credit. That makes for a very competitive environment – and one that consumers can use to their advantage.”
If you've been squeamish in the past about asking making a request of credit card issuers, the advantage is now in your court.
“It makes for a very competitive market and you can use that to your advantage,” Schulz said. “This is a very positive sign for credit card holders. When in doubt, give them a call. You never know what might happen.”
Past Behavior Makes a Difference, Along With Identity
Of course, having a higher credit score will increase your odds of obtaining a lower APR, Schulz said. Credit card companies more than likely will complete a quick check of your credit or payment history.
Even if the credit card company reviews your full credit, it is likely to affect your credit only for a little awhile. The chance that you could wind up earning substantial savings in the long run makes it “worth the risk,” Schulz said.
Depending on your account and history of paying on time, not all requests will be successful. Higher-income households were much more likely to receive lower interest rates and late fee waivers. Some 72% of the highest-income households, or those with an annual income of $75,000 or greater, successfully asked for a lower interest rate versus 55% of those with annual income between $50,000 and $74,999.
In the highest-income households, 93% of were able to get a late payment fee waived compared with 76% of those with annual income between $30,000 and $49,999.
Age also played a big role in whether or not a lower interest rate request was approved. Only 33% of 18 to 29-year-olds were granted their requests, but that percentage jumped to 59% of 30- to 49-year-olds and 79% of 50- to 64-year-olds.
Taking the time to call the credit card issuer can yield greater savings for the shopper, said Gail Cunningham, spokesperson for National Foundation for Credit Counseling, the Washington, D.C.-based non-profit.
“The same person who will comb the Internet to find free shipping on a purchase will often be reluctant to pick up the phone and ask for a concession from their creditor,” she said. “Financial institutions want to keep good customers. If a person has a good pay history, it’s highly likely that the issuer would rather grant the request than lose them to a competitor. Much is lost by lack of asking.”
--Written by Ellen Chang for MainStreet