3 tips for negotiating better credit card terms

By Justin Boyle

A friend of mine recently sat me down and told me that she was in a dismal, one-sided relationship with her credit provider. She had been a responsible customer, never missing a payment and never maxing out her limit, but the terms of her contract hadn't changed since college and she didn't feel like she could talk to them about it.

Luckily for her (and for all of us), not only is it possible to reason with credit companies, but there are proven pathways to the raised limit or lowered rate that you know you've earned. By arming yourself with a few key pieces of information, you can gently but firmly encourage your issuer to hear what you have to say.

1. Know who to talk to

First of all, most companies put customers through an automated phone tree for routine services. You're not going to get anywhere presenting your reasoned negotiations to the robot that answers your call, so get out of the tree as soon as you can (this is often achieved by mashing the 0 key until you're asked to hold for an operator).

Even when you get a human voice on the phone, you're still not all the way to your destination. Although customer service reps may be human, they don't typically have the sort of decision-making power that's necessary to authorize changes to your contract.

Not that you shouldn't ask a tier-one CSR if they can help you out, because sometimes they do have perk protocols for quality customers. Understand, though, that their "no" isn't the company's "no" -- it's just them telling you that your request isn't a part of their call flow. Ask kindly for a manager (the magic words are often "team leader") to really get things rolling.

2. Always come prepared

At least two things are true about negotiation with credit providers: Nearly all of them can provide certain special considerations to customers who deserve it, and practically none of them will give it to you unless you know how to ask. Here's what you'll need:

1. Your credit report. You probably won't need the document itself (although it can be helpful), it's just that asking for adjustments to your credit contract can spur your provider to look closely at your credit history. They may ask you for information that a credit report can handily provide.
2. A few counteroffers. Credit companies are like any other company in that they want to retain customers. If your APR is 17 percent and another provider offers you 14.99, you might just have the leverage you need to get a lower rate on your existing card.
3. Backbone. One of the most powerful tools in any negotiation is the willingness to walk away from a deal if it isn't going well. If you make a reasonable offer and your credit history indicates that you're worth the risk, it's important to stick to your guns and see the negotiation through to the end.

3. Be flexible

Remember: As important as it is to stand your ground during negotiations, it's also important to know when to bend. If you wanted a permanent three-point reduction in your APR and they're offering you two points off for 12 months, don't flat-out refuse. Ask if they can do the two points permanently, or if you can get three off for the year, or if they can throw in any extras to sweeten the deal.

The real point of negotiation is finding a happy medium, a point where both sides feel like they're gaining something. If your credit provider is willing to work with you, it's only fair that you're willing to work with them. After all, getting what you want has a lot to do with wanting something you can get.

Of course, sometimes your provider just won't be able to help you. In these cases, bear in mind that there are other things you can do to take ownership of your personal finance journey. There's a whole world of promotional rates, sweet sign-up deals and low interest balance transfers that can help you manage your debt wisely.

But if your credit is strong, it can't hurt to ask. Happy negotiating!