How a Quick Call Can Change 4 Things About Your Credit Card

Girl with computer and credit card
A simple phone call can potentially save you hundreds of dollars, improve your credit score, score you extra frequent flier miles and more — and your chances of success are higher than you’d imagine.

Most people never make that call, though. Maybe they’re too busy. Maybe they don’t know what to say. Maybe they don’t think it will matter.

It does matter — and consumers’ reluctance to make that call can cost them.

Of course, not everything can be fixed with a phone call. For example, if your payment is late for the fourth time in six months, don’t expect the bank to cut you any slack. But many things can be tweaked or improved if you take the time to call your card issuer.

Here are a few examples:

Late Payment Fee

A survey last year showed that 86 percent of cardholders who asked to have a credit card late payment fee waived got their wish.

The problem is only 28 percent of cardholders have asked. While not everyone has been late with a payment, chances are lots of cardholders are paying those fines without knowing that a simple call could get them out of it.

Some card issuers — Discover being perhaps the most prominent among them — advertise that they won’t charge a late fee on your first late payment. Many other card issuers will waive the fee for some of their cardholders, but only if the cardholder asks.

A good record of on-time payment can help seal the deal. When you call, make sure the bank knows you’re rarely late and that it won’t happen again.

Interest Rates

That same survey also revealed about 2 in 3 cardholders who requested a lower interest rate got one, but just 23 percent had ever asked. Again, that means a large number of cardholders are missing out on a large amount of savings.

How big? Consider this:

  • If you have a $5,000 balance on a credit card with a 20 percent interest rate and pay $150 a month, you’ll pay $2,359 in interest before paying the card off over 50 months.
  • Lower that interest rate to 15 percent and keep everything else equal, you’ll pay $1,508 in interest in just 44 months. That’s a savings of $851!

Could you get your card issuer to lower your APR as much as 5 percent? Maybe or maybe not. But even lowering that APR to 18 percent — just a 2 percentage point drop — would save you about $375 in interest.

Credit Limit

An increased credit limit can do wonders for your credit score. That’s because it can quickly shrink your credit utilization ratio — how much debt you have compared to your available credit. For example, say you have $5,000 in available credit and $2,000 in debt. That means your credit utilization is 40 percent, well above the recommended goal of 30 percent or less. However, if you can increase your credit limit to $7,000, your utilization rate suddenly drops to an acceptable level of 29 percent. Your credit score is likely to improve as a result.

Be cautious, though. Don’t expect the bank to double your credit limit. You can likely improve your odds of success if the increase is a baby step rather than a giant leap.

One temporary downside: Your credit card issuer might do a hard pull of your credit when deciding whether to increase your limit. With any hard pull, you will likely see a small, temporary decrease in your credit score. However, the long-term benefit of the higher credit limit will likely outweigh any brief hit your credit might take.

Sign-up Bonuses

This is a move you’d need to make before you actually get the card, and you’ll need to do some homework to make this work.

Say you’ve received an offer in the mail from your bank for a card that you really like. The card comes with a low APR, no annual fee for the first year, no foreign transaction fees and a 20,000 point sign-up bonus. Sounds great, right? Yes, except for the fact that you’ve gone online and seen other offers of 40,000 or 50,000 points.

Well, if your credit is excellent, there’s a good chance that you can have those points. Just give your bank a call, tell them about the other great offers that you’ve seen and ask the bank to match the offer. Again, if you’ve got strong credit, you’ve got a good chance of success.

No Guarantee of Success

As mentioned, data has shown that cardholders are more likely to have their requests granted than they’d expect. But that doesn’t mean any of these are a slam dunk. The reality is that people with the best credit get the best treatment, the best rewards, the lowest APRs and the most fees waived.
Before you pick up the phone to talk to your bank, be sure you know where you stand with your credit. Get a free copy of your credit report, and dispute any errors or omissions you find. Get your FICO credit score. And of course, pay your bills on time, every time, in the weeks and months leading up to your request. These moves can help increase the chance that the next request you make will be a success.