BALTIMORE — President Donald Trump called on credit card companies to cap interest rates at 10% by January 20. Several weeks later, cardholders haven't seen a change. But if you want a lower credit card interest rate, all you have to do is ask.
According to a LendingTree survey, cardholders who did saw an average drop of nearly 7 percentage points. And if the answer is no, there are other ways to ask for a break.
"The average interest rate is between 19 and 20 percent among all cardholders," said Thomas Nitzsche, a financial educator with Money Management International.
But for people seeking debt help, rates are often much higher.
"The average client that we're working with comes to us with about a 28 percent interest rate at the time they first seek counseling," Nitzsche said.
Nitzsche says cardholders who enroll in a debt management plan can see interest rates drop by as much as 20 percentage points. Payments from multiple creditors are consolidated into a single monthly bill, typically paid off within four years.
"The trade-off with the debt management plan, you get that awesome interest rate, but you're also not using that card anymore, right?" WMAR-2 News Mallory Sofastaii asked.
"Right, the accounts do close, so it is kind of a hard reset on your credit life," Nitzsche said.
The programs also come with a small monthly fee of about $26. But credit counselors aren't your only option.
"LendingTree found that over 80 percent of people who asked their creditor for a lower interest rate got it, and that on average they reduced that interest rate 6 percentage points," Nitzsche said.
WMAR-2 News put it to the test. Eric Satisky, a WMAR-2 News employee, usually pays off his balance in full, but he called his credit card company to see if he could get a lower rate.
"I have absolutely no idea what my interest rate is right now," Satisky said.
It turned out to be 20.49 percent.
"I was calling to see if there's any way that I can lower my interest rate on my credit card," Satisky said to the customer service agent.
The answer was no.
"I would have thought they would have done something, honestly, just because I feel like I've been a customer for a while because I've never had an outstanding balance I figured they would've said we could do this or we could do that," Satisky said.
So he asked for something else.
"Are there any temporary deals at this point that may be available or anything to help with like a balance transfer or anything of that nature?" Satisky said.
This time she offered a zero-percent balance transfer for 15 months with a 4 percent transfer fee. But Nitzsche warns balance transfers and debt consolidation loans can backfire.
"You have to also have a lot of discipline to not use the cards that you've paid off while you're paying down the debt on the balance transfer card. Because we see that a lot with both balance transfers and debt consolidation loans, that folks will take out the consolidation loan or do a balance transfer, but they won't change their spending habits," Nitzsche said.
LendingTree also found 95 percent of cardholders who asked to have an annual fee waived or reduced were successful, 89 percent who wanted a late fee waived got it, and 86 percent of cardholders who requested a higher credit limit received one.
Every decision is up to the creditor and your history with them, but even a small rate reduction can mean real savings.
While many cardholders have had success in requesting interest rate reductions and annual fee waivers, LendingTree found creditors are getting stingier about waiving balance transfer and foreign transaction fees. The success rates for those are just over 50 percent.
For information on credit card debt counseling, click here.
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