How to Haggle With Your Credit Card Company

Haggling is almost a lost art: These days you usually only see it in select settings -- garage sales, used-car lots, and appliance stores, to name a few. But you might be surprised to learn that you can call up your credit card issuer and haggle over the terms of your agreement.

This came up last week when we looked at credit card offers, and specifically the fact that when you fill out an application for a "pre-approved card," you could end up with less desirable terms than you expected. As a few experts pointed out, you could respond by calling up the company and seeing if they're willing to make the terms a bit more favorable.

"If [the card is] not attractive to you, call them and ask if they can increase your limit or lower your interest rate," Credit.com's Gerri Detweiler told us. "Forty-four percent of consumers surveyed said they'd successfully negotiated away a bank fee."

Whether you'll succeed depends on a few factors. Here's what you should know before you start wheeling and dealing.

You need to speak to a manager. Chances are, you're asking for a significant change to your account -- you probably want the bank to lower your interest rate, raise your credit limit, waive a late fee or do away with an annual fee. To do so, call the customer service number on the back of your card and ask to be transferred to a manager or a customer retention specialist.

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"Go ahead and ask to speak to a supervisor," says credit card expert Beverly Harzog, author of the upcoming book Confessions of a Credit Junkie. "The person who answers the phone is going to have limited ability to get what you want, especially if you want annual fee waived or interest rate lowered."

You'll save everyone some time by getting someone with power on the phone.

You'll only succeed if you're a good customer. In this exchange, your only real negotiating power is the implied (or explicit) threat that you'll close the account if you don't get what you want. But that threat is only scary to the bank if it actually wants to keep you as a customer.

"The first thing I suggest is to take a look at your history as a customer," says Harzog. "If you routinely pay late, don't even bother with this strategy. If you're a fantastic customer, you have a good chance."

So beyond paying on time, what makes a good customer? In short, one who makes the bank money. Obviously, one way to do that is to pay your bill on time, but carry a balance so you're paying interest to the bank. But even if you pay off your balance every month, you might still be considered desirable if you're charging enough purchases to the card.

Credit card companies make an interchange fee of about 2 percent to 3 percent on every transaction, so if you're charging $500 a month to your card, then the bank is still going to be making some money on you as a customer even if it waives your annual fee. (The reverse is also true: If you hardly ever use the card, don't expect them to forgo what little profit you do bring them.)

Consider the competition. When you're asking for a raise at work, it helps to have another job offer on the table that you can use as leverage. The same goes for credit cards: It can help your case if you've got other credit card offers on the table.

"One negotiating tactic I like is that if you've got a good credit score, go through credit card offers, and bring that up on the phone," says Herzog. "Say, 'They're offering me 11 percent and you're charging me 16 percent.' "

As Herzog notes, it helps to have a good credit score -- if you've got lousy credit and you're crowing about all the great offers that you're getting, chances are the bank will call your bluff.

Know how far you're willing to go. So what happens when the person on the other end of the line says no? At this point, you've got some decisions to make.

As we've noted before, closing credit card accounts can hurt your credit score by lowering your utilization rate (that is, how much of your total available credit you're using). If you really do have better offers on the table, you can make up for that loss by immediately opening up another credit card, but that hard inquiry will also ding your credit score a bit. So if, for instance, you're simply upset that the bank won't lower your rate, you might be better off doing a balance transfer to another card but keeping the original card open. (Incidentally, the threat of shifting your balance to another bank's card could be enough to get the outcome you want.)

But if the card in question has an onerous annual fee and you determine it's not worth it -- perhaps because you're not getting enough rewards to balance out the fee -- then you should make good on your threats and take your business elsewhere.

Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.