Credit Card, College Deals for the Creditworthy

I wrote a story for this week’s issue about tightening credit standards and how borrowers with great credit rule the roost.

The financial elite can certainly find deals on credit cards, which is why those folks who have credit scores above 720 and carry a balance on a credit card with a rate of 9% and up should ask for a rate cut, says Curtis Arnold, founder of

For Marc Rosner, a chemistry teacher in Hastings-on-Hudson, N.Y., it just took one phone call to American Express to get the rate on his small-business credit card slashed from 18%. “They apologized, cited a single late payment I made two years ago, and dropped me to 8% before the call ended,” Rosner says.

Lenders are more willing to listen to credit card customers like Rosner, thanks to the current market environment. After all, it costs them about $200 per in marketing fees to replace you if they lose your business. “In this tight credit market, if you are a good customer, you have some room to negotiate,” says Bill Hardekopf, CEO of “If your rate is too high, call up your issuer, and say you have offers from competitors.” It also pays to persevere. If your request for a lower rate doesn’t work the first time, wait a month and do it again, and then try again the following month, Hardekopf says.

In addition, 80% of credit cards don’t have annual fee, so if you have good credit and are paying an annual fee, it is worth a shot to call up and request a fee waiver. Indeed, I was feeling so empowered by my own reporting, that I called up American Express on Oct. 16 and asked them if they would waive the fee on my card. (I still use the same plain-Jane green card, which has a $55 annual fee, and it isn’t a credit card since I pay off the balance every month.)

The Amex customer service rep offered me a Blue card, which is no-fee credit card, but I don’t want a card that allows you to revolve a balance.

Then I got passed along to another rep. While she couldn’t waive the fee entirely, she did credit $15 to my account. Not bad for a 10 minute phone call. Following Hardekopf’s advice, I’m going to try again next month to see if I can get the fee cut even further—next time I’ll ask them if they would consider waiving it for one or two years.

You will not have much wiggle room with college financing because federal and state student-loan rates are typically fixed. At least 36 private lenders have suspended writing loans, but borrowers with the best credit can still get loans.

On the flip side, if you have lots of cash socked away for college and it is time to pay tuition, ask the school about a prepayment tuition plan, which lets you lock in current tuition prices. “It’s not something we advertise,” says John Gudvangen, associate director of financial aid at Colorado College in Colorado Springs. With tuition outpacing the rate of inflation for the past 10 years, it can be a smart move to pay upfront.

Another tip for parents who are about to pay for school with cash: If you live in one of the 32 states that offers tax deductions for 529 savers and you don’t have a 529 College Savings Plan, open one up. Even if you park the money an account for a week and then yank it out to pay for school, you will get a tax deduction. Admittedly, this is a little sneaky, but college administrators and financial aid experts say they have seen it happen.

As for real estate, Bob Moulton, president of the Americana Mortgage Group, Manhasset, N.Y., told me the fascinating story of a client who was buying a $2.5 million home in Nassau County, N.Y., over the summer and planned to put $1.5 million down. But the first bank, which was a local one, rejected him for a mortgage because his credit score (671) was not high enough. It turns he had missed a mortgage payment within the year while he was traveling. He ended up getting a mortgage from another bank, Moulton says.