High Annual Percentage Rate? You Can Negotiate!

The battle between the consumers and the credit card lenders is one that will not cease to exist. And, in this never ending battle, the consumer does wield some power.

Despite the fact that the credit card lenders are still reeling under the tremendous losses they experienced during the recession period coupled with the newly enforced credit card rules and regulations, financial experts say that the consumers still have an option of negotiating the interest rate on their card with their lenders.

Pew Charitable Trusts' Safe Credit Cards Project's director, Nick Bourke, said that the credit cards companies are as willing today to negotiate on the interest rates as they were before.

Many consumers, in the recent past, faced a lot of concerns while trying to negotiate on their APR with their respective lenders.

However, with the Congress implementing the CARD Act in February this year, the concerns began to fade away.

The CARD Act outlines that the credit card companies cannot increase the interest rate on the card if the account has been opened within the last six months. Arbitrary increases in APR and double cycle billing concerns have also been addressed in this Act.

The banks and various financial institutions did warn the Congress about the adverse impact of this Act on the consumers and lenders, even before the legal advisors began putting this together.

In May 2008, during a hearing session with the Congress, American Bankers Association's Chief Executive, Edward Yingling mentioned that the financial bodies were concerned that the rules implemented in the Act will lead to lesser choice for customers, increase in interest rates, fewer credit cards being given to customers and lesser competition in the industry.

Till date, most of the predictions made by him during this hearing session seem to have come true.

Anticipating the rules to get tougher in the coming months, many credit card companies increased the rate on the cards last summer. Though this is the underlying reason for the increase in the APR, the banks camouflaged the facts by telling that the rate increase was to combat the number of customers who were not able to make their payments on time due to the financial crunch.

The rates have continued to trend northward since then. The national average APR stood at 11.31% for platinum card holders and at 12.33% for rewards card holders, as mentioned by Informa Research Services. The rates stood at 10.6% and 11.8% respectively till six months ago.

Bryant Park

Bryant Park is a financial consultant for one of the companies listed on Wall Street. He writes on a variety of topics ranging from credit cards to different loans that can be availed by consumers. He holds a bachelor degree in Financial Services from Dartmouth College.