How to Score More Loyalty Perks From Your Credit Card Company

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Savvy consumers have been negotiating lower bills with cable providers, Internet providers, and wireless carriers for quite some time. This often involves calling the company and threatening to cancel to try to get a better deal. Did you know that you can do something similar with your credit card company and often score a "retention" offer?

These are offers that include the removal of annual fees, free rewards, and even a reduction in interest rate. After all, card companies have spent a lot of money and resources to get and retain your business and they definitely don't want to lose you. Here is what you need to know to make it happen.

1. How to Make the Phone Call

Start by simply calling the customer service number on the back of your card. The first person you speak with is likely not the person to negotiate with. You'll likely have to tell them you want to cancel your card before they'll step up their game and transfer you to the retentions department. In most cases, you can also streamline the process by asking the customer service person to transfer you directly to "retentions."

The retentions department will ask you why you want to cancel. At this point, just be honest. If the annual fee is too high, then tell them. If you feel your rewards or miles program is lacking, then say it. If you feel customer service is a disgrace, tell them.

2. Have Ammunition When Making the Call

Your chances of scoring a retention offer increase significantly if you present a valid reason to actually get one. Perhaps you had a terrible customer service experience, maybe the company screwed up a payment and issued you a late fee, or maybe you are actually considering closing the account anyways because you don't need the card. Whatever the reason, your chances of success rise significantly if you have ammo to fire off when making the phone call. Without ammo, they have no reason to help you out and will often just cancel your account.

It's also worth noting that your chances of success increase if you are actually okay with canceling the card. The rep you talk to on the phone can usually detect if you are not serious about canceling and simply fishing for a retention offer. Be calm, be confident, state your case, and let them know you are willing to let this card go if they can't offer you something.

3. Smart Things to Ask For

Annual Fee Removal

If your card carries an annual fee, you can ask to have it credited. This is a great place to start if you are new to this, as many cards will happily remove the annual fee if you have a grievance. (See also: Best Credit Cards with No Annual Fees)

Free Reward Points or Miles

If your card is a reward card — either points or airline miles — this would be a smart thing to ask for. Just be reasonable in your request as it will greatly increase your chance of success. (See also: Best Travel Rewards Credit Cards)

Interest Rate Reduction

If the interest rate on your card is outrageous, especially compared to similar cards, then ask for an 8%-10% permanent reduction in your rate. You could even ask for a greater reduction during set period of time, like 12 months. (See also: Best Low Interest Rate Credit Cards)

4. Let Your Silence Speak Volumes

When negotiating a bill or service via the telephone, ask for what you want then simply be quiet and force the company representative to either accept your offer or counter it. If the counter is not to your liking, simply say "no" and nothing else. Let the uncomfortable silence speak for you. It places the onus back on the rep to come up with something better or risk losing your business.

5. What if the Card Company Calls Your Bluff?

If your credit card company calls your bluff, you have two options. If you were legitimately okay with closing the card in the first place, you can simply cancel the card and pay off the remaining balance. If your call was more to feel the company out to see if a retention offer was possible, you can simply say, "Before you cancel the card, I need to think about it and look at my options." Or something to that effect. Once the card is closed you won't be able to simply call them back and re-instate it.

6. Possible Side-Effects of Canceling a Card

Before you start calling all of your credit card companies and demanding a retention offer, it's important to realize the possible negative side-effects of canceling a card.

Credit Utilization Ratio

You need to consider how much available credit you will lose if you close a particular card. If the card has a relatively large credit limit and you close it, and yet continue to charge the same amount every month on other cards, your credit utilization rate will rise significantly. Be aware of this, as it could adversely affect your FICO credit score.

Credit History

Another thing to look at when deciding whether to close a card is your length of credit history. If the card you're considering closing is far and away your oldest, you probably don't want to close it, as it could affect your credit score. Length of credit history accounts for 15% of your FICO credit score.

Have you ever received a retention offer from your card company? If so, what did you get?