The secret to lower credit card rates and fees

Americans are up to their ears in high-interest credit card debt, but there is a way out.

The typical American has a credit card balance of $6,375, up nearly 3 percent from last year, according to Experian’s annual study on the state of credit and debt in America. Total credit card debt has reached its highest point ever, surpassing $1 trillion in 2017, according to a separate report by the Federal Reserve.

Meanwhile, credit card rates are also at a record high, at an average of 17 percent, according to Bankrate.

With the Federal Reserve‘s latest quarter-point interest-rate hike, credit card users will cough up roughly $1.6 billion in extra finance charges in 2018, according to a WalletHub analysis.

Most credit cards have a variable rate, which means there’s a direct connection to the Fed’s benchmark rate, and as interest rates increase, card holders will continue to get squeezed.

But as balances and rates rise, one method has proved extremely effective in getting cut some slack.

A merchant slides a credit card for a transaction.

David Paul Morris | Bloomberg | Getty Images
A merchant slides a credit card for a transaction.

If you ask your credit card issuer to drop an annual fee, waive late charges or reduce your interest rate, your credit card company is highly likely to say yes, according to a recent survey from CreditCards.com.

The success rate, while good across the board, varied based on the type of request cardholders made:

  • 85 percent who asked received a higher credit limit.
  • 84 percent had a late-payment fee waived.
  • 70 percent got their annual fee dropped or reduced.
  • 56 percent received a lower interest rate.

Despite a high chance of success overall, only a small number of cardholders are making each type of request, mostly because they aren’t aware it’s an option.

“It is really as simple as picking up the phone and asking nicely,” said Matt Schulz, senior industry analyst at CreditCards.com.

Some preparations for your credit card negotiations will also help. Schulz recommends collecting a few competitive card offers to use as leverage and stressing your own positive credit history and on-time payments. Then seriously consider switching cards if you can do better elsewhere.

“If you are willing to walk away, that gives you more power in the negotiation as it does in any negotiation,” Schulz said.

Of course, “you still have to pay what you owe,” he added.

More from Personal Finance:
Credit card debt hits record high
Your credit score may have just jumped. Here’s why
You’re probably using the wrong credit card. Here’s how to fix that

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