Is There a Way to Negotiate Lower Interest Rates With Creditors?

It depends on the context, your existing credit history and what rates competing lenders are willing to offer you based on your perceived credit risk.

For example, there are multiple points at which you can potentially negotiate a lower interest rate on a mortgage. When you’re shopping around for mortgages, you can approach lenders with rates you’ve qualified for from other loan originators.

You might do this if you’d prefer to keep your mortgage with your existing bank or credit union even though the initial interest rate, they offered you wasn’t very competitive. Reach out to them with evidence that another lender is beating their rate and they may adjust what they’re offering to keep you as a loyal customer.

You can also try to negotiate a lower rate on credit cards but doing so successfully isn’t always easy. There are certain historical factors that will likely influence the credit card company’s receptiveness. Customers who have been around for a long time or who have relatively solid records of regularly making payments are more likely to achieve favorable results.

Credit card companies make money off people who carry a balance on their cards, but they can potentially lose money if you never pay them back. If you temporarily getting a lower rate increases the likelihood of them getting paid back, they might be amenable to negotiations.

Mortgage Discount Points

Some mortgage lenders might offer “discount points.” These let you put more money down to get a slightly lower interest rate for the life of the loan. The equation is usually one percent extra down for 0.25 percent off your interest rate. Even relatively small decreases in interest at the start of your loan can save you tens of thousands of dollars during the 30-year life of a loan.

There’s generally a parallel between what you’re willing to put down and the rates for which you’ll qualify. If you can afford it, increasing your down payment can have long-term benefits for your interest rate.

Negotiating With Credit Card Companies

Some of the tactics that work in mortgage interest rate negotiations can also be effective when dealing with credit card companies. Going into negotiations with proof that you qualify for lower rates elsewhere can give you a lot of leverage during negotiations.

You shouldn’t try to mislead credit card representatives during negotiations. They can easily pull your credit history or investigate the rates you claim you could get elsewhere. Dishonesty may damage your reputation with the credit card company.

There’s also a right and a wrong way to conduct negotiations in these circumstances. The frontline customer service reps you speak with likely don’t have the authority to unilaterally grant you a lower interest rate on your credit card debt. Ask for a supervisor or try to identify someone with the authority to authorize those types of changes.

Also avoid being rude to the customer service representatives. These can be stressful issues, but the person on the other end of the line isn’t the cause of your interest rate. Being impatient and combative can stall your negotiations.

If you have multiple cards, start your negotiations with the companies you’ve used longest. The trust you’ve built over the years, if you’ve historically been good at paying at least the minimum each month, may help in your negotiations.

Some credit card companies are amenable to offering temporary breaks on credit card rates if you can make the case that the lower rate will help you get back on track.

Can You Negotiate a Better Rate on Savings Accounts?

This is an interesting question for long-term savers, especially if you’re concerned with market volatility or prefer to have a significant sum of money in liquid form for emergencies. Savings accounts are notoriously low interest. Banks are happy to charge you high interest rates on borrowed money, but they aren’t big fans of paying high interest rates to their customers.

It may be possible to negotiate your savings account rate if you can find the right person to talk to and you can make a compelling case that it’s in your bank’s best interest to do so.

Many people bank at institutions where getting a higher savings rate simply won’t be possible. If that’s your situation, consider looking at alternative financial institutions that offer high interest savings accounts or investigate alternatives like CDs or bonds.

Get Help With Your Retirement Savings and Long-Term Investment Strategies

The team at Fullerton Financial Planning are dedicated to helping Phoenix savers prepare for the future. Our fiduciaries excel at developing retirement saving and investment plans to help people in all types of situations.

Get clear answers to your investment questions by calling us at (623) 974-0300.