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A high-interest credit card can be a major burden on your finances. The average credit card interest rate was just over 23.00% as of January 2023, according to the Federal Reserve — which could translate into steep interest charges if you only make the minimum payment each month.
However, there are ways to potentially lower your credit card interest rate, such as improving your credit score, applying for a balance transfer card, or taking out a personal loan. These steps could help you save money while paying off your balance.
In this post:
- Improve your credit score
- Find competitive credit card rates
- Call your card issuer and ask
- Apply for a balance transfer card
- Take out a personal loan
1. Improve your credit score
Your credit score helps determine what kind of interest rates you qualify for, so improving it can lead to a lower rate. But before you take steps to increase your score, you should check it to know where you stand.
Then, once you learn your score, be diligent on the following key points, so you can start to move the needle upward:
- Pay your bills on time. “Payment history is the most heavily weighted factor in your credit-score calculation at 35%,” says Leslie Tayne, founder and principal debt attorney at Tayne Law Group.
- Reduce your account balances. Using most of your available credit will likely reduce your score.
- Avoid opening new accounts. Applying for new credit typically results in a hard credit inquiry on your credit report, which can cause your score to drop.
So, why does a higher credit score often translate into a lower credit card interest rate? “This is because a higher credit score indicates a history of making timely payments and managing credit responsibly, which reduces the risk for the credit card issuer,” Tayne says
“On the other hand, a lower credit score indicates a higher risk for the credit card issuer, which means they may offer you a higher interest rate to compensate for the added risk.”
In general, the better your credit score, the lower your rate.
To get a lower interest rate, you’ll likely need good to excellent credit — a good credit score is usually considered to be 700 or higher. This is why it’s a good idea to check your credit before making the request so you know what your score is.
Learn More: How Personal Loans Impact Your Credit Score
2. Find competitive credit card rates
If you want a lower interest rate, it may be time to shop around for a new credit card. Tayne says you can research different credit card options on websites that aggregate offers. Generally, you can sort cards by interest rate, annual fee, rewards, and other criteria. You may even be able to check if you qualify for your card of choice without a hard credit inquiry.
But if you don’t want to open a new account, you might be able to negotiate a lower interest rate with your current credit card issuer.
3. Call your card issuer and ask
One way to possibly get a lower credit card rate is to simply ask your credit card issuer for a reduction. Generally, credit card issuers are more likely to agree to these types of requests if you have good credit and are a good customer who pays your bills on time.
When you make the call, a few points to mention include:
- How long you’ve been with the company
- Your history of on-time payments
- Whether your credit score has gone up
- If you have better offers from other credit card companies
Also keep in mind that your request might not be approved. If this happens, don’t be discouraged — ask what you need to do to lower your interest rate and when you can request a reduced rate again in the future.
Check Out: How to Get Out of Credit Card Debt
4. Apply for a balance transfer card
A balance transfer card could be a good option if your current credit card company doesn’t approve you for a lower interest rate on your card. With a balance transfer card, you can move your balance from one card to another one with a lower rate.
Tayne says a balance transfer card offers, “a promotional interest rate for a limited time, often ranging from 6 to 18 months, during which you can pay off the transferred balance without accruing additional interest charges” (assuming a 0% introductory APR). Used strategically, a balance transfer card could help you save money on interest and pay off your debt faster.
But keep in mind the following:
- You need solid credit to qualify. Your application may get denied if your credit score is under 670, according to Experian.
- You’ll likely have to pay a fee to transfer your balance, which is usually a percentage of the transferred amount.
You must pay off the transferred balance by the time the promotional APR period ends. Otherwise, you could get stuck with hefty interest charges.
Learn More: Personal Loan vs. Credit Card
5. Take out a personal loan
Another option is taking out a personal loan to pay off your credit card debt — a process known as debt consolidation. Personal loans often have lower credit card interest rates than credit cards, which means you could save money on interest charges while repaying your debt.
Tayne says, “The interest rate on a personal loan is usually fixed, which means it stays the same over the life of the loan. Personal loans also have a fixed repayment period, usually ranging from one to seven years.” That means a personal loan could be a good option if you have a significant amount of credit card debt to consolidate.
If you’re struggling to get approved, consider applying with a cosigner. Not all lenders allow cosigners on personal loans, but some do. Even if you don’t need a cosigner to qualify, having one could get you a lower interest rate than you’d get on your own.
If you decide to take out a personal loan, it’s important to think about how much that loan will cost you. This way, you can be prepared for any added expenses. You can estimate how much you’ll pay for a loan using our personal loan calculator below.
What’s a good credit card interest rate?
Tayne says, “As a general rule of thumb, a good interest rate for people with excellent credit (usually a FICO score above 720) is around 12% to 15%. Conversely, a “good” rate may be around 25% to 30% for someone with fair credit.” So, if you’ve got a solid-to-stellar credit score, your credit card interest rate could be significantly less than the Federal Reserve’s current published average of 23%.
A credit card’s interest rate depends on many factors, including:
- Your credit score and financial history
- The credit card issuer’s internal guidelines
- Current economic conditions (Federal Reserve interest-rate hikes to combat inflation generally raise credit card interest rates, according to Experian.)
- The type of card you choose ( Rewards credit cards typically come with higher interest rates.)
However, “it’s important to note that credit card issuers may periodically adjust interest rates, so even if you have a good interest rate when you first get a credit card, it may change over time,” says Tayne.
Balance transfer card vs. personal loan
Balance transfer cards and personal loans are both options to consolidate credit card debt and hopefully save money on interest along the way. If you’re considering a balance transfer credit card vs. a personal loan, consider the pros and cons of each:
Pros of balance transfer credit cards
- 0% APR: Some balance transfer credit cards come with a 0% APR introductory offer, which means you can avoid paying interest if you pay off your balance before this period ends.
- Could help build your credit: If you make all of your payments on time, you might see your credit improve — which could help you qualify for better rates in the future.
- Rewards or perks: Depending on the card you choose, you might have access to various rewards or perks, such as cash back or points.
Check Out: How to Pay Off Credit Card Debt Fast
Cons of balance transfer credit cards
- Balance transfer fees: Most cards charge a balance transfer fee — generally from 3% to 5% — that could increase your balance.
- Higher interest rates: Credit cards generally have higher interest rates than personal loans. While you might be able to take advantage of a 0% APR introductory offer — depending on the card — carrying a balance beyond this period could lead to steep interest charges if you don’t pay off the card by your due date each month.
- Might be tempting to rack up a balance: A balance transfer card is still a credit card. Even if you pay your initial balance off, it could be tempting to use the card and end up with a balance again.
Learn More: How Debt Consolidation Loans Can Help Your Credit Score
Pros of personal loans
- Lower interest rates: Personal loan rates are usually lower compared to credit cards. This could save you money on interest charges and even help you pay off your loan faster.
- Fixed monthly payments: Personal loans generally have fixed interest rates, which means your monthly payments will stay the same throughout the life of the loan.
- Options for poor or fair credit: While many personal loan lenders require good-to-excellent credit, others do offer personal loans for bad credit.
Check Out: Small Personal Loans: Compare Top Lenders Today
Cons of personal loans
- Might come with fees: Some lenders charge fees on personal loans, such as origination or late fees. This can add to your overall loan cost.
- Can have larger payments: Depending on your repayment terms, you might end up with higher monthly payments on a personal loan compared to a credit card. Before you sign for a loan, be sure your new payments will fit comfortably into your budget.
- No rewards: Unlike credit cards, personal loans don’t come with any rewards.
Learn More: How to Check If a Personal Loan Company Is Legitimate
How to take out a personal loan
If you decide to take out a personal loan to help reduce the amount you pay in credit card interest, follow these four steps:
- Check your credit. Like with credit cards, personal loan lenders will review your credit to determine your creditworthiness as well as what rates you qualify for. To see what shape your credit is in before you apply, use a site like AnnualCreditReport.com to review your credit reports for free. If you find any errors, dispute them with the appropriate credit bureaus to potentially boost your credit score.
- Compare lenders and pick a loan option. Be sure to consider as many lenders as possible to find the right loan for your needs. Consider not only interest rates but also repayment terms and any fees charged by the lender. After researching lenders, choose the loan option that works best for you.
- Complete the application. Once you’ve picked a personal loan lender, you’ll need to fill out a full application and submit any required documentation, such as tax returns or pay stubs.
- Get your funds. If you’re approved, the lender will have you sign for the loan so the money can be released to you. The time to fund for a personal loan is usually about one week — though some lenders will fund loans as soon as the same or next business day after approval. Certain lenders will pay your creditors directly if you prefer.
Before you take out a personal loan, remember to consider as many lenders as you can to find the right loan for you. Credible makes this easy — you can compare your prequalified rates from our partner lenders below in two minutes.
The personal loan companies in the table below compete for your business through Credible. You can request rates from all of these partner lenders by filling out just one form (instead of one form for each) and without affecting your credit score.
| Lender | Fixed rates | Loan amounts |
|---|---|---|
Credible Rating
Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
| 7.99% - 35.99% APR | $7,500 to $50,000 |
|
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Credible Rating
Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
| 9.95% - 35.99% APR | $2,000 to $35,000** |
|
||
Credible Rating
Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
| 7.99% - 15.19% APR | $10,000 to $50,000 |
|
||
Credible Rating
Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
| 8.99% - 35.99% APR | $2,000 to $50,000 |
|
||
Credible Rating
Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
| 6.99% - 24.99% APR | $2,500 to $40,000 |
|
||
Credible Rating
Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
| 11.25% - 24.5% APR | $5,000 to $40,000 |
|
||
Credible Rating
Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
| 9.57% - 35.99% APR | $1,000 to $40,000 |
|
||
Credible Rating
Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
| 7.99% - 35.99% APR | $2,000 to $36,500 |
|
||
Credible Rating
Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
| 7.49% - 24.49% APR | $5,000 to $100,000 |
|
||
Credible Rating
Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
| 18.0% - 35.99% APR | $1,500 to $20,000 |
|
||
Credible Rating
Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
| 8.49% - 17.99% APR | $600 to $50,000 (depending on loan term) |
|
||
Credible Rating
Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
| 5.99% - 35.99% APR | $3,500 to $40,000 |
|
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Credible Rating
Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
| 8.99% - 25.81% APR10 | $5,000 to $100,000 |
|
||
Credible Rating
Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
| 11.69% - 35.99% APR7 | $1,000 to $20,000 |
|
||
Credible Rating
Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
| 8.49% - 35.99% APR | $1,000 to $50,000 |
|
||
Credible Rating
Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
| 4.6% - 35.99% APR4 | $1,000 to $50,0005 |
|
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Should you close your credit card?
After you’ve paid off a credit card, you might consider closing it. However, keep in mind that if you close a credit card account, you might see your credit score drop. This is because a closed account could:
- Raise your credit utilization ratio: This ratio compares your available credit to the amount you owe, so the ratio would increase.
- Lower the average age of your credit accounts: If you’ve had the account you plan to close for an extended period.
However, if you continue making payments on time on your other credit accounts, your score will likely bounce back within a few months.
Keep Reading: Pay Off Credit Card Debt ASAP With a Personal Loan
Tips to prevent paying credit card interest
Securing a low credit card interest rate is good, but paying no interest is even better. So, if you plan to use a credit card to cover your expenses or already have a credit card balance, here are some tips to eliminate that cost:
- Pay off your full balance every month. Tayne says doing so will prevent interest from accruing on your account. But, “if you can’t pay your entire monthly balance, try to pay more than the minimum payment. This will help reduce the amount of interest you’ll accrue over time.”
- Open a 0% introductory purchase APR credit card account. If you need to finance a major purchase, applying for a card that doesn’t initially charge interest could be a smart move. Your introductory period will likely run 12 to 18 months after account opening. During that time, no interest will accrue, says Tayne. But, if you don’t pay the balance off by the end of the promotional period, you’ll pay the standard interest rate on the remaining amount.
- Transfer your existing balance(s) to a card with a 0% introductory APR. If you get approved for a card with a 0% introductory APR, you can knock out your high-interest credit card debt fast. But remember, you must get that account balance to $0 before the promotional period ends to completely avoid paying interest.
Dori Zinn has contributed to the reporting of this article