We get it. You saw that 0% APR promotional offer and had to pounce. Or you might’ve gotten a credit card a long time ago when your credit score wasn’t as stellar. Regardless of how you got your credit card, you’d like to figure out how you can lower your credit card interest rate.
A high-interest credit card can be a burden on your finances. If you can’t make monthly payments in full, your bill continues to tower over you. Your interest keeps increasing your total amount owed and you’ll be paying off your credit card longer.
Here’s how you can lower your interest rate:
How to lower your credit card interest rate
No matter which pickle you’re in, you have options for how to lower interest rates on your credit cards. Here’s how you can get started.
1. Ask for it
Best for: Those who already have a well-established relationship with their credit card company
There’s no better way to get an answer than to ask for something. This includes your interest rates.
Make a phone call to a customer service representative at your current credit card company and ask how you can get a lower rate. Tell them you’re a good customer and your current interest rate is too high and you’re not able to pay off your card as fast as you’d like.
If you’ve had an account with them for a while, even a couple years, you have value. Since the credit card company wants to keep you around, they should be able to help find a way to lower your interest rate or work with you in other ways.
2. Shop around
Best for: Those who can find deals easily and qualify for better offers
If your current credit card company won’t lower your interest rate, shop around at competitors. Other card issuers are looking to steal away your business and it’s in their best interest to give you an enticing offer.
Browse through competing offers and see which ones offer a lower interest rate than what you have now. Comparing many different lenders to know which one offers the best interest rate. Keep in mind other rewards, like cash back or travel points, if those are important to you.
If you find an enticing offer, you can go back to your credit card provider and ask them to meet the competition. If they do, you’ll avoid making the transfer. But if not, you’ll get a new credit card with a new company and a better rate.
3. Prove you’re worthy
Best for: Those who can put off lowering interest rates by spending time boosting their credit score
If you’re stuck getting approved for a lower credit card interest rate, you may need to spend some time proving your creditworthiness. Review your credit score and history through AnnualCreditReport.com, try to get any bad marks removed, and take steps to build up your credit.
If you’re behind on payments, start making them on time every month. You only need to make minimum payments, but any extra money can help lower your credit utilization.
This may take more time than you thought. It could mean putting off lowering your interest rate until your credit situation improves.
4. Stop using the card
Best for: Multiple card owners or those with decent credit scores who can carry many cards
The best way to avoid racking up a big credit card balance is to stop using your card. This will give you a chance to focus on lowering your balance and ultimately your interest payments. The lower your credit card balance, the lower the interest you’ll end up paying on it.
If you have another card to use that offers better perks, take advantage of them. You can either transfer your balance if the card offers a free balance transfer, or you can use the other card in place of your old one.
If the card offers a special introductory offer, like no interest for the first 18 months, take advantage of that time to pay down your debt on the other card.
5. Consolidate with a personal loan
Best for: Those with decent credit who can qualify for a personal loan
If you can’t drop your high credit card interest with a new card, try a personal loan instead.
Personal loans also have interest rates, but they’re typically fixed and lower than credit card interest rates. You can take out a personal loan for a shorter term (typically two to seven years), pay off your high-interest credit cards, and then pay your personal loan off according to your new terms.
Not all lenders offer the same interest rates and flexible terms, so make sure to browse through the best ones to find the right one for you. It might help to see what your potential monthly payments could look like with a personal loan, so use our personal loan calculator.
While bad credit won’t get you the best rates and terms for a personal loan, you still might qualify for one. Keep in mind that if your interest rate isn’t lower with a personal loan, it’s not worth consolidating your credit card debt this way.
Lowering your credit card interest rate can save you money
Your credit card interest rate can be prohibitive when trying to repay your debt. It can be the determining factor in whether you’re able to make monthly payments on time or not.
Not making on-time payments every month could derail your credit score and inhibit your ability to get a credit card or a loan in the future. Getting the lowest possible interest rate you can sets you up for success and will help you continue to build a strong credit history.