Credit Card Interest Rates

Question

From what I can see, the going fixed interest rate in the US and Canada with Visa, and MasterCard is about 20%. I almost never see a card with a lower interest rate than this. If I do see one it is a floating interest rate based on prime + some percent, with an annual fee.

Is it possible to negotiate with credit card companies to get a lower rate or are you just stuck with the rate they give you?

I have heard many times that the only time CC companies will lower your rate is if you are in debt with them and threaten to leave, or might default. My intuition would be that people with a high credit score should be getting a lower rate, but do they?

Why are credit card companies so reluctant to reduce the interest rates on their products?

Answer 1

People with a high credit scores generally aren't paying interest to the credit card companies. If they need to borrow then they get a mortgage, car loan, home equity loan or even a signature loan; any of which are way under 20%.

If you have a credit card that does have high rates, and the company has multiple card offerings you might be able to switch to a different card they offer.

When I evaluate a credit card offer the annual fee (zero), cash back/points/miles are much more important than the interest rate because the way I use the card the interest rate never comes into play. I have no idea what my current rates are.

For some people the rate, and fees for balance transfers are the driving factor when picking a card. When you do see very low rates they are generally teaser rates that will expire in a given number of months.

They offer these low rates to entice a certain profile of customer. They offer cash back to attract another profile.