How to Negotiate a Lower Interest Rate on Your Credit Cards

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Credit card can be a convenient way to pay for things while mortgage and earn rewards. These advantages, however, can be seriously compromised by a high interest rate. Currently, the average credit card interest rate in the United States is 16.15%, according to CreditCards.com. At this rate, paying off a balance of $ 10,000 over four years would cost you $ 3,422 more.

An open secret in the industry is that credit card interest rates are negotiable. And we’ll tell you exactly how to do it.

What you should know first

Before you call your credit card company and start a negotiation, we recommend that you do some preparation beforehand.

Calculate your credit score

Some of the first things your credit card company will look at are your payment history and your credit score. You can order a free annual credit report to make sure it’s accurate and to see your payment history and debt-to-income ratio (DTI). Examination of the report – checking for late payments or other defaults – will give you an idea of ​​how assertive you can be when asking for a lower rate.

Read more: The best credit monitoring services

Collect competing offers

You will also want to research the rates offered by competing credit cards. (We recommend that you consult our best credit card lists to see the most competitive deals right now.) Save any pre-approval emails or postcards you receive, or search similar cards with lower prices to find out about other offers available. Coming into the conversation with ammunition of information will give you a stronger negotiating position.

How to ask your credit card provider for a lower interest rate

Once you feel ready to ask for a lower rate, negotiation can begin. Here are four steps you could take to negotiate a lower interest rate.

  1. Call your card provider: Contact your credit card issuer and explain why you want the interest rate reduced. You can start by highlighting your history with the company and mentioning your good credit or on-time payment history. Now is the time to mention the lower credit card rates that you have been offered or found in your research.

  2. Do not settle: The credit card company may initially decline your request or offer a minimum discount, but you don’t have to pay if the resolution doesn’t meet your expectations. You can always ask for more or an explanation of the decision. If you feel like you’re going nowhere on your first phone call, be diligent. Call back another time and try your luck with another representative or ask to speak to a manager and take your case to a higher authority.

  3. Request another benefit: If the company refuses to lower your interest rate, ask what else it could do to keep you as a customer; representatives may offer bonus points or additional incentives.

  4. Request a temporary tariff reduction: If you’re worried about paying off a balance with your current high interest rate, ask for a temporary stay, which may offer you a lower interest rate for a short time.

Alternatives to consider

If your credit card company isn’t giving you the discount you were hoping for, there are alternatives.

  1. Apply for a balance transfer credit card: A lot balance transfer cards have little or no introductory APR for a period of time, after which the APR will increase dramatically. But it might save you time. That said, balance transfer cards still charge a fee for debt transfer – typically between 3% and 5% – so make sure your potential savings outweigh the cost.

  2. Create a debt repayment plan: Start a budget (or tighten up your existing card) and make a plan to pay off your credit card debt faster. If you have multiple card balances, use the avalanche method by making the minimum payment on all cards – using the extra funds first to pay off the card with the highest interest rate. Go down until they’re all paid.

  3. Apply for a debt consolidation loan: A Personal loan can be a convenient way to pay off high interest credit card debt. In the case of a debt consolidation loan, you could consolidate the balances of several cards into one loan with a lower interest rate.

Best Advice: Avoid Credit Card Interest Completely

The best way to avoid high interest rates is to eliminate the interest payment in the first place. Get in the habit of paying off your credit card balance every month, so you never have to worry about your interest rate level. Sign up for automatic payments to pay off your balance in full each month or make payments every time you use your card.


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About Joan Ferguson

Joan Ferguson

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