APR Reduction Question

[Involus]

So basically what I want to know is how do I go about getting an APR reduction? Many of my cards are still at 24% from before I had good credit and as my credit continues to grow and I start getting cards with better APR I want to be able to go back to like my Chase Freedom and get them to lower my APR.

I know the obvious answer is PIF - but there are times and unforeseen incidents that may lead to having to carry a balance for a statement or two.

So would I just call a backdoor number like I would for anything else and ask for a APR reduction? Would they have to pull my report? SP/HP?

[YahComb]

funny you use your freedom as an example, because chase seems to be one of the more unfriendly banks when it comes to lowering APRs.  People seem to have pretty good success with Discover. BOA and Cap1(with the exec office at least) are other banks i think you can probably work with. I'm not really sure about citi or AMEX though.

Usually an APR reduction shouldn't cost a HP, but that might be a YMMV thing.

[CreditWorld2013]

Bank Guidelines/Rules: 

1. Evaluate your account periodically to see if your current APR can be reduced to a more favorable term. 

1. Banks can’t increase an APR without giving you advance notice. If you don’t agree with the rate increase you can “opt out.” In “opting out” you are effectively closing your account. If you a balance when the account is closed your balance will still be billed at your original interest rate. Not the proposed higher rate. 

1. If you pay your credit card late and a Penalty APR is applied it can be reduced. That is, if you make 6 monthly payments on time the rate is reversed to your original rate. 

1. If your rate is normally increased simply because of market conditions or whatever reason the bank decided to increase your rate. The account must be reviewed periodically to see if you qualify for a lower rate. In other words, If you have a credit card at 21% and the bank rates on the credit card for new applicants ranges from 13% - 21% the bank should use the formula as if you were to apply for a new card based on credit profile/account status at the time of the review. In essence, the bank should formulate your credit profile as if you were applying for a new card from them and if the rate is lower...they lower your 21% to whatever rate you qualified in the formula.

[armbenderc]

Edit: sure did.

[maiden_girl]

In my experience with APR reduction...I've never had it lowered permanently. Just temporarily for a few months. A few times by CAP1. One agent went as far as to say "You've never paid APR anyway so I don't know why you want a lowered APR." Because I just do. Lol. I might want to carry a balance and don't want the stress of a crazy APR.

[CreditWorld2013]

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@armbenderc wrote:

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@CC365 wrote:

Well, this is almost a trick question with most banks...especially Chase. The Card ACT requires lenders to review accounts periodically and if they find that you are in good standing,etc they are suppose to give you a lower rate as if you were going to apply for a new account. In other words, they are suppose to look at the account and credit profile and forumalte what rate they would give you if you were to apply for a new account. So... if you have a 24% APR from Chase but your credit profile is better and your account is in good standing...they are suppose to lower your rate to what it would be if you applied for a new card using the new information. 

This also applies to a Late payment penalty APR. BUT if the reason they increased your rate was because of a late payment you must keep your account current for a specific time (sometimes as little as 6 months) and then they can't continue using those grounds to keep the rate the same. In other words, if the original issue that caused the rate increase has been rectified they have to return you to a lower rate. 

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I agreed with you. There are also some loophole that other people used. For instance, take out a unsecure private loan, and use it to pay student loan.

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I think you missed the original post 

[trumpet-205]

Again, people misunderstood CARD Act.

The only APR evaluation and decrease required by CARD Act is balance before penalty APR. If you suffered a penalty APR increase then after a consecutive 6 months of on-time payment any balance prior to penalty APR must return to original rate.

To better demonstrate this, consider this example,

* I missed my payment on March and got hit with penalty APR (15% to 30%). Balance at this time was $500.

* After consecutive 6 months of on-time payment, balance is now $100. But then I charged additional $700 for purchase.

* Interest for that $100 is returned to 15%. Interest for that $700 and any amount thereafter will remain on 30% indefinitely.

[genmic]

Trumpet - I think this is the part of the CARD Act others are referring to:

http://www.creditcards.com/credit-card-news/credit-card-interest-rate-reductions-1282.php

[CreditWorld2013]

Again, Mr. Trumpet has the condescending attitude. And again...proven that reading is a good thing and not something that should be feared. 

Bank Guidelines/Rules: 

1. Evaluate your account periodically to see if your current APR can be reduced to a more favorable term. 

1. Banks can’t increase an APR without giving you advance notice. If you don’t agree with the rate increase you can “opt out.” In “opting out” you are effectively closing your account. If you a balance when the account is closed your balance will still be billed at your original interest rate. Not the proposed higher rate. 

1. If you pay your credit card late and a Penalty APR is applied it can be reduced. That is, if you make 6 monthly payments on time the rate is reversed to your original rate. 

1. If your rate is normally increased simply because of market conditions or whatever reason the bank decided to increase your rate. The account must be reviewed periodically to see if you qualify for a lower rate. In other words, If you have a credit card at 21% and the bank rates on the credit card for new applicants ranges from 13% - 21% the bank should use the formula as if you were to apply for a new card based on credit profile/account status at the time of the review. In essence, the bank should formulate your credit profile as if you were applying for a new card from them and if the rate is lower...they lower your 21% to whatever rate you qualified in the formula.

Brief Overview of Card ACT of 2009

Consumer Financial Protection Bureau Guideline on APR Increases/Reductions

Consumer Financial Protection Bureau Opting Out Information

Consumer Financial Protection Bureau APR Reversal

[trumpet-205]

Let's take a closer look at the CARD Act, the actual wording.

(a) In General.--If a creditor increases the annual percentage rate applicable to a credit card account under an open end consumer credit plan, based on factors including the credit risk of the obligor, market conditions, or other factors, the creditor shall consider changes in such factors in subsequently determining whether to reduce the annual percentage rate for such obligor.
(b) Requirements.--With respect to any credit card account under an open end consumer credit plan, the creditor shall--
            ``(1) maintain reasonable methodologies for assessing the factors described in subsection (a);
            ``(2) <<NOTE: Deadlines. Review.>> not less frequently than once every 6 months, review accounts as to which the annual percentage rate has been increased since January 1, 2009, to assess whether such factors have changed (including whether any risk has declined);
            ``(3) reduce the annual percentage rate previously increased when a reduction is indicated by the review; and
            ``(4) in the event of an increase in the annual percentage rate, provide in the written notice required under section 127(i) a statement of the reasons for the increase.

From here, we know that APR can only be reduced if your APR was increased, this can be from penalty APR, prime rate adjustment, etc. If you started out with high APR, CARD Act does NOT even require APR evaluation every 6 months.