If you’re like the majority of people in Canada there is a good chance you have credit card debt. Whether it is a couple hundred dollars, or thousands of dollars – there is an even better chance you could benefit from a lower rate. Unfortunately what people don’t realize is that a lower rate is literally a phone call to your credit card company away.
There are a few scientifically tested psychology “tricks” that will help improve the chances you end that call with a lower interest percentage.
Most people don’t realize but credit card companies have some wiggle room on your interest. Referred to commonly as a “preferred rate,” it might better be called, “those who called and asked rate.” Now obviously exceptions will apply (credit history, outstanding debt), but the majority of cardholders can take advantage of this, right now.
The first step is to call prepared with a game plan. Once connected to a service person ask a few basic questions such as “What is my billing period?” or “I’m not sure I understand this ‘Rewards Point’/ ‘Cash Back’ system, can you explain it?” The answers you will receive are all scripted, as they will likely be reading off a computer screen. The trick is to throw them off the script by throwing in something unexpectedly.
What follows is a template of a script to do just that, change it as you see fit but you have to be sure it keeps the main points. It follows three important psychological tactics that will make you more persuasive. I’ll give a more thorough explanation after, but without further adieu here it is:
“You must be a very helpful and kind person and I can’t tell you how thankful I am for that. Can you give your full name and connect me to your manager after the call so I can pay you a proper compliment.”
Why this will help:
1) “You must be a very helpful and kind person…” – The most important word here is person. This is a global compliment to their character as opposed to restricting it solely to their job at hand. Saying, “you’ve been very helpful and kind” only means your complimenting them on their job, and although kind, won’t have the same effect.
You’re setting up the power of retribution and it’s one of the foundations of human society. We have a very powerful mechanism that makes us essentially return favours. Or to nicely summarize: “You scratch my back; I’ll scratch yours.”
2.) “Can you give me your full name?” Asking for their full name is a way of personalizing them. It takes away their single name anonymity, which means they are no longer a stranger and as you just paid them a compliment are even more likely to comply and help you with your upcoming request.
If you really want to play dirty you can repeat their last name surprised saying “that’s an amazing coincidence, that’s my mother’s maiden name.” People are so strongly connected to their name, that researchers have actually showed that (no kidding either…) in a town like Steveston, BC there will actually be more people named Steve living there. Weird but true. But if you decide to use this one – I’ll leave the ethics up to you.
3.) “Connect me to your manager after the call so I can pay you a proper compliment.” – This is the capper. This simple little request can improve your chances for that simple reason you are going to give them something of value: a compliment. Referred to as the norm of reciprocity it basically means that having offered that person a favor they are now obliged to return it.
Social psychologists have proven time and time again that this is one of the most simple and effective means of persuasion as it is so ingrained into who we are. The cost of paying a quick compliment is very minimal compared to the money you will save with a lower interest rate. Just as long as you follow through on your compliment – it’s an ethical one as well.
The rest is up to you. What’s worked for me is simply asking about lowering my interest rate. Nothing devious about it. Having already set up the momentum with a little psychology, both times my request has been met with enthusiasm and a lower interest rate.
This is a guest post from Donald at Life Cover, which offers life insurance and critical illness insurance to Canadians.
Lower Your Credit Card Interest Today With A Few Simple Psychology Tricks,
Pretty cool guest post
… I wonder what kind of agency to make such changes the individuals have in other areas, like reversing charges etc etc. I am sure these tips would work across all wishes 
.-= Forest´s last blog ..FREE DOWNLOAD -Tribes: We Need You to Lead Us by Seth Godin =-.
A similar technique would work for a lot of things, I’m going to try this on my cable operator today.
.-= Paul @ FiscalGeek´s last blog ..PocketSmith Personal Finance Software Review and Giveaway =-.
Before you try to lower your rate, ask yourself if rate is really the problem. Maybe paying off the debt and paying no interest would be better!
Thanks for the comments (and to Tom for the guest post). Bibledebt, you make a great point… paying no interest is probably the best option of all. A lower interest rate will definitely help you pay back your credit card debt but it’s not solving the real problem. Forest & Paul: you’re right, these tips could be used to save on many things.
The rate may not be the core issue; in fact, it might be the actual card! There are some great cards out there that offer promotions at great interest rates. For eg, I know MBNA has offered 1.9% for 6 to 12 month terms on balance transfers. I know there’s a time frame attached, but at least it offers the consumer the change to transfer debt to lower interest rates while they work at paying the debt off!
Nice post.
.-= The Rat´s last blog ..Borrowing Against Your Home =-.
Very interesting post! I’m a big fan of psychology!
But I’m actually a bit confused.. At what point do we actually *ask* for the lower interest rate? It seems that the following steps are:
1.) ask a few basic questions
2.) throw them off the script by throwing in something unexpectedly by saying the “script”
When would we ask for the lower rate? It can’t be before Step #2, or it’d defeat the purpose, since we haven’t given them all of those “compliments” yet.
So it must be after Step #2, but would it not be a bit obvious to the employee that you tried to suck up to them initially? It’s like your child saying “Mommy, you look beautiful today! Oh, by the way, can I have toy car we saw at Toys ‘R Us?”
I guess I don’t know how to make the immediate transition from “the script” to the actual asking of lowering the rate. Besides, didn’t we just ask to be directly transferred to the manager?
But this was an interesting post Donald, and I look forward to more guest posts from you.
Hi W,
I’m glad you found the post interesting and you bring up some good points and concerns
Just to recap the order I suggest:
1.) Throw them off their script first
2.) Use my recommended suggestion, or something you prefer with the three discussed points.*
3.) Ask about a “preferred rate”
*I don’t think I really did a good job of pointing it out, but in the script I said “Connect me to your manager AFTER the call”
So if I were the average blog reader and wanted to try my suggestions, I would rewrite my script with something that sounds more natural to your ear. As long as it keeps the core points it will still have the same effect. I also wouldn’t immediately ask about the “preferred rate” right after, but instead opt to throw in a few more “dummy” questions as to lessen the chance about your “bluff’ being called. It’s sounding genuine and believable that matters. The last thing you want is to be seen as as disingenuous or worse, conniving.
But, you bring up a really good example with the Toys’R Us scenario, but I think it only supports the point about how intrinsic these mechanisms truly are. It’s an interesting question to ask how a young child could learn such a behaviour, yet it seems pretty universal, at least in my experiences with kids. But kids get better at it over time, and over time they become adults. The vast majority may be able to pick up on a child’s intentions, but with an intelligent adult things get a little more difficult.
As we all know, predicting human behaviour isn’t an exact science. What I have suggested are only factors that increase the odds that someone will go one step further in helping you get a preferred rate. Imagine telling a customer representative they are ignorant, anyone could do their job and that you want to talk to their manager after to tell them how disappointed you are that you had to deal with such an incompetent individual. I think you could safely assume this person wouldn’t really want to go the extra mile for you. Same idea at play in the article, only one that tips the odds in your favour, but no, not a guarantee.
Personally, I can only speak from experience and who’s to say that simply calling up and asking straight out for a preferred interest rate wouldn’t have worked. But, I think on average if you took two groups – ones who took my suggestion and ones that simply asked straight away – you’d find that those who employ these little tricks are going to be more successful on the whole.
Alas, I think I just unintentionally wrote another guest blog article…
If anyone wants to explore more on the topic I suggest this book as a great introduction to some of the themes I touched on in the article.
The book is Persuasion: Science and Practice by Robert Cialdini. Really well presented and enjoyable to read.
I don’t see why this would not work but it almost looks like a bluff and they may call it. Would be glad to try this on my bank although I don’t think they’d lower my interest rate. I know they’d let me pay a fixed monthly no matter my total outstanding balance if only I asked for it. LOL! =D
.-= Tand Blekning´s last blog ..Tandblekning Hemma =-.
Seems like a thing that could work. Definitely a thing I would try at my bank. Thanks for the tip! / F
The rate may not be the core issue, in fact, it might be the actual card. A lower interest rate will definitely help you pay back your credit card debt but it’s not solving the real problem!
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Do think this will be possible in other countries then just Canada? I live in sweden and could very much use it! Anyone knows??
The rate may not be the core issue; in fact, it might be the actual card! There are some great cards out there that offer promotions at great interest rates. For eg, I know MBNA has offered 1.9% for 6 to 12 month terms on balance transfers. I know there’s a time frame attached, but at least it offers the consumer the change to transfer debt to lower interest rates while they work at paying the debt off!