How to Get Lower Interest Rates on Credit Cards

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how to get lower interest rates
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Interest can make credit card debt feel inescapable, and your interest rate plays a big role in how much you have to pay. Credit card interest rates determine at what rate you have to repay your issuer if you do not pay off your credit card debt in full each month. Let’s say your credit card has an interest rate of 17%, and you don’t pay off your credit card balance by the due date. You’ll have to start paying your credit card issuer interest on top of your current account balance at a rate of 17%. Each consumer credit card has its own interest rate, and a low-interest card isn’t always possible. While it may seem like a definitive number, there are actually ways that you can get a lower interest rate no matter what type of card you have, which will help you save money and do wonders for your financial planning.

Study Your Current Credit Card Terms

Knowledge is power, they say, and that goes for the terms on your credit card. The more information that you can know about your current interest rate and terms, the more prepared you will feel when heading into a negotiation.

Some of the most important bits of information that you should know include:

  • Credit card balance: how much you have charged to your credit card
  • Payment due date: the last day that you can make your next payment
  • Grace period: the time between the end of your credit card’s billing cycle and when your credit card payment is due when interest does not accrue
  • Current interest rate: the rate at which interest will accrue if you do not pay your credit card bill in full
  • Desired interest rate: the rate at which you would like for interest to accrue if you do not pay your credit card bill in full

When you talk to the customer service representative, it’s possible they will say that they cannot offer you a lower interest rate. Don’t let this throw you for a loop. The more information that you can bring to the table, the more determined that you look to lock in a lower credit card interest rate.

Determination and preparation go a long way toward helping you earn an interest rate reduction.

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Know Your Current Credit Situation

More than just your credit card interest rate and terms, you should also have a grasp on your current credit situation — including your credit score, payment history, and general use of credit.

The higher your score, the more that you’ll be able to prove to your credit card company that you’re able to repay debt on time and use credit responsibly. Good credit scores make it easier to convince lenders that you’re worthy of a lower credit card interest rate.

It’s especially important for you to take note of your credit score if it has increased since you first applied for the card. If you had a low score when you first applied, it’s likely that the credit card company built buffers into your term sheet, such as a higher interest rate or more expensive fees.

Many credit card companies commonly do this to offset the risk involved with lending someone money who doesn’t have a positive borrowing history. However, if your score has increased since then, that’s a good reason for a credit card company to give you a lower interest rate.

Improve Your Credit

If you look at your credit score and feel like it’s going to be a hard sell to bring down your rate, you have options.

First, don’t forget that it never hurts to ask. Just because your current credit score is lower than average, that doesn’t mean that you can’t try for a lower rate. As long as you’re polite during the negotiation, the worst that the customer service representative can say is no.

However, if you don’t feel ready to negotiate because your credit score is too low, work on bringing it up before talking to your credit card issuer. There are a number of ways that you can bring your credit score up relatively quickly as long as you are consistent and determined to change your financial habits to fit your new goals.

Two of the most influential components of your credit score are: payment history and credit utilization.

  • Payment history: how reliable you have been with on-time payments over the course of your credit history
  • Credit utilization: how much of your total credit limit is in use at any given time

If you keep the balances low on each of your credit cards (use no more than 30% of your credit limit) and make more than just your minimum payment each month, you will start to see your score rise.

For an added bonus, try not to close old credit accounts, even if they are not in your regular payment rotation. Use old cards sporadically, but make sure to pay off your balances. You should also limit new credit applications, as each one results in a hard inquiry. Keeping old accounts open and limiting hard inquiries can also add points to your score.

Shop Around

(A little) shopping never hurt anybody. When it comes to credit cards, it’s good to know what’s out there. It can help build your case when going into a negotiation.

You certainly don’t want to walk into a negotiation swinging, saying, “I’ll leave if you don’t give me a rate decrease.” Chances are that the negotiation will not go in your favor. You may even leave things on bad terms with the credit card company and mess up your chances of getting credit with them in the future.

Politely explain to the representative that you’ve looked around and found other, lower rates that you are eligible for. This might persuade them to lower your credit card rate. In general, it costs more for a company to sign a new customer than to keep an existing one, which bodes well for you.

Remember: If you are actually shopping around for different credit cards, be careful how many you apply for. Each application requires a hard inquiry by the credit card company into your credit file, which causes your score to drop several points. If you are trying to lower your credit card interest rate, you probably want to keep your score as high as possible to help your case. In other words, only apply for credit cards if you are serious about switching providers if you don’t get the rate decrease.

Contact Your Credit Card Company

Call the customer service number for your credit card company, and have a few pieces of information prepared:

  • Name
  • Address
  • Credit card number
  • Credit card interest and term information that you collected earlier
  • Potentially your Social Security number (to verify your identity)

Introduce yourself, and tell them that you are calling about a lower rate. Consider following this script if you don’t know where to start:

“Hello. My name is , and I’m calling to request a lower interest rate on my credit card. I’d like to see what you can do for me.”

At this point, the representative may tell you that they cannot lower your credit card interest rate. That’s okay — this is why you’ve prepared your points of leverage. You can explain to them that you have a positive payment history or that you always keep your balance low. If your credit score has increased since you first opened the account, or if you’ve shopped around and found similar credit cards with better interest rates, this is the time to let them know.

Be Polite, Persistent, and Prepared to Not Get a Rate Decrease

A little kindness goes a long way. Remember that the customer service representative that you are speaking with likely didn’t write the rules on interest rates. It’s important to be patient and polite during your negotiation — it could play a significant role in whether you succeed or not.

You should also remember that it’s okay to press the issue if you initially hear “no.” Your points of leverage can come in handy. If you have several arguments working in your favor, you may be able to nudge the representative to see things from your point of view. Sometimes, success depends on the representative that you speak with, so you can try calling back a few days later to speak with someone new or asking to speak with higher level management.

Finally, you have to be willing to lose some negotiations. Occasionally, you may only bring down your interest rate a little bit, or you may not get a lower interest rate at all. Try not to get discouraged. Your account and payment history play heavily into whether or not credit card companies lower your interest rate. Focus on taking the necessary steps to improve your credit so you can try again in the future.

Don’t Be Afraid to Call Again

If you hear no the first time that you try to lower your interest rate, don’t assume that you will never be able to get a lower rate. Ask the representative what you can do to increase your chances of getting the rate decrease in the future — then make a plan to make it happen.

Develop a strict debt management plan, and prioritize paying off your credit card balances in full each month to avoid paying interest altogether. Budget so that you do not have to rely on credit so much, and do what you need to do to get your credit score up. Determination is key. If you are steadfast with the changes that you make to improve your credit score, your score will increase and you will in a better position when you call up your credit card company next time.

The next step: Actually make that call. Negotiations do take time and energy, but they can pay off — in more ways than one — in the long run.

Transfer Your Balance

Credit card interest is a burden and can dig you deep into financial turmoil. A debt consolidation loan is one option, but debt consolidation is not an option for everyone. If you’re not able to bear your interest rate anymore because it is causing too much financial damage, consider a balance transfer credit card.

Balance transfer cards allow you to transfer balances on one or more credit cards to a different card, typically with a lower or 0% introductory APR. Transferring your balance to a different card can be a strategy for paying off debt faster, as interest will not accrue for a predetermined period of time. This way, you will be able to focus on debt repayment without interest piling up simultaneously.

The kicker is that the introductory period eventually ends on a balance transfer card, and once it does, the interest rate on that credit card may be even higher than the interest rate of your original credit card. This is why it’s important to make — and stick to — a strict payment plan to ensure that you pay off your debt in a timely manner.

With balance transfers, you may encounter a balance transfer fee, which tends to be a percentage of each transfer. Credit card companies will sometimes waive these fees, but you should plan on the added cost in case you are not able to get them waived with balance transfer offers.

Last Updated on January 01, 2024
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Disclaimer: The information provided in this website is for educational purposes only and should not be considered as financial advice. Consult with a financial professional for personalized guidance regarding your specific situation.
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