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A high-interest credit card can be a burden on your finances. If you can’t make monthly payments in full, larger interest payments are going to keep you from paying off your debt. The total amount you owe will continue to rise and you’ll be paying off your credit card longer.
But there are ways to lower credit card interest rates, and you might enlist a few different methods to find a solution that works for you.
In this post:
- How to negotiate a lower credit card interest rate
- Other ways to lower your credit card interest rate
- Frequently asked questions
- Lowering your credit card interest rate can save you money
How to negotiate a lower credit card interest rate
Before asking for a lower rate, make sure you know your current rate first, so check your bill or visit your issuers website.
If you’re already paying the lowest interest offered, you might not need to do anything. But if you’re paying more than the lowest interest rate for the card, you’ll want to know what those numbers are before you call your lender. Here’s what else you should do.
1. Leverage your relationship
You’ll typically have better luck negotiating a lower credit card interest rate with a company you’ve had the longest relationship with.
When you call, mention how long you’ve been with the company and the length of your credit card history with them. Banks and other lenders value long-term relationships and will usually try to work something out with you.
2. Show you’ve improved your credit
Check your credit score and credit report thoroughly. If you’re in good standing, and your score has gone up since you got your credit card, this can be good leverage to getting your lender to lower your rate.
If it hasn’t gone up, use this time to improve your credit before asking for a lower interest rate, since a higher score can help you negotiate in the future.
3. Check out competitors
If you can find a similar or better offer from a different credit card issuer, use it as a haggling tool. Lenders don’t want to lose business and would rather give you a promotional deal — like a 0% APR for 12 months, for example — instead of losing you as a customer.
Many lenders and credit card issuers will also offer similar or better offers than what you have now. Even a promotional offer for another card with a lower interest rate from your current issuer would be good to mention. That way if you can’t lower the interest rate on your current card, you could move to one that has a better rate.
4. Be respectful
When you’re speaking to your customer service representative, respectfully explain the reason for your call (being nice and pleasant goes a long way!). Ask about lowering your interest rate and what steps you need to take in order to get that taken care of.
Remember to mention your on-time monthly payments and your higher credit score since you applied for your current card, as well as any competing offers you’re considering.
5. Be prepared for anything
While you might be expecting your credit card issuer to immediately say yes, there’s a chance they might say no. Don’t be discouraged.
Have a backup plan if your first course of action doesn’t work out. It’s better to have an open mindset going into your negotiation call than getting upset if things don’t go your way. A rejection now doesn’t mean rejection in the future.
Keep a respectful tone and ask what steps you need to take in order to lower your interest rate and when you can request one again in the future. Also, keep in mind that if you have multiple credit cards, you can move onto the next one on your list and request a lower interest rate for one of them.
If that doesn’t work: Choose a competing offer
If you didn’t get a lower interest rate with your current credit card issuer, don’t fret. There are plenty of other offers out there for you to choose from.
Consider a balance transfer with a 0% introductory APR. This will give you time to pay off your existing balance without interesting adding up on top of it. Some balance transfer offers charge a fee — typically between 3% to 5% — so make sure you’re OK with that before signing up.
If the transfer doesn’t cover your full balance, though, you’ll be responsible for paying off your new card as well as the remaining balance on your old card. So, try to pay off the old card as soon as possible to avoid more interest piling up.
Other ways to lower your credit card interest rate
1. 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.
2. 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.
Keep in mind that if your interest rate isn’t lower with a personal loan, it’s probably not worth consolidating your credit card debt this way.
Frequently asked questions
1. How do I get my credit card company to lower my interest rate?
It comes most often by asking. Credit card companies are not obligated to lower your interest rate if your credit score goes up or you’re making regular, on-time payments. But you can negotiate using your improved credit score and creditworthiness to prove your case when you make the call.
2. Can you negotiate APR on credit cards?
An APR on credit cards is the same as an interest rate, which means it can also be negotiated like one. If you’re struggling with a high APR on your credit card, you can negotiate it down following the same steps above — like calling up your credit card company and asking or using a personal loan to pay down your high-interest debt.
3. What is a good APR for a credit card?
The lower the rate, the less you have to pay in interest. So, typically, a good APR is one that’s less than what the average credit card user pays. Right now, the Federal Reserve has 15.10% as the average APR for credit cards. This should be your goal APR to meet or beat.
Lowering your credit card interest rate can save you money
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 can set you up for success and will help you continue to build a strong credit history.