Originally Answered: As my credit improves, will my credit card companies lower my interest rates and increase my credit limit?
No. you're not stuck with the rates they gave me when I signed up. But you must take action.
Yes, they can just choose to increase your credit limit automatically, but you'll get better results if you take action.
Here is part of the answer I just wrote to answer the recent question, "You always see credit cards for people with bad credit, but what about if you have AWESOME credit?"
The treasures await you, but you MUST take action to get them. The users who are complainers or are assertive dealers get the very best deals: they've made the efforts that produce the best results. They use the phone to play off one card company against others until one of the companies budges. Because I never pay finance charges, I had to learn and practice this behavior before I could train others to do it. The companies have regular customer service reps as well as Customer Retention Departments, backup departments hired to keep you happy and loyal.
Avail yourself. Try picking up the phone and in a pleasant, cheerful, polite tone, telling your creditor, "I'm thinking of closing my account unless you lower my rates and improve my rewards. What can you do for me today?" If the front-line rep doesn't satisfy, ask for his/her direct supervisor. Then move over to customer retention. If you don't use your trump card of offering to abandon them unless they actively compete for you, they have no incentive to compete for you. It's sad that many customers don't act because of their unrealistic fear of being seen as a troublemaker by an authority figure like a credit card company: the top (unrealistic) barriers in people when phoning creditors: fear of retribution and a sense of shame and undeservedness. The big discovery awaiting such people: entire departments are hired to keep customers happy, delighted.
Do NOT close the card, even if they suggest you close it or ask if you really want to close it or tell you that you "must" close it. Just say "No, thank you. I do not want to close my account yet." Closing a card can never help your score, and it can hurt your score. You're just using the THOUGHT of closing as a negotiating point.
If you don't get what you want today (that is, you get a No from the 2 reps and their supervisors, a total of 4 No's), call again in 3 - 6 months or after your scores rise another 30 points each. The higher your score, the easier it is to get what you want. FICO 650 is above sub-prime (620), but it is below average (673 - 720, depending on the survey), and your goal is 760, above which you can get the very best deals and rates.
Good for you for paying down those balances and taking care of yourself responsibly! Your goal on each cc balance is to get each balance below 30% of the credit limit. This is called credit utilization, and it's worth 30% of your FICO score. You need to keep a revolving credit balance below 30% of the credit limit, or it can hurt your score.
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