The Easiest Way to Lower Your Credit Card Interest Rate
What’s the easiest way to lower your annual credit card interest payments and save hundreds of dollars? Asking . It’s easy to do, but people leave money on the table – only half of all cardholders have ever asked their lenders to cut rates or waive fees, although 84% of the time it works, according to a survey by CreditCards.com .
How much can you save
There is no guarantee that your credit card will approve of the lower interest rate, but the potential savings make you give it a try. Consider this example from Investopedia :
A $ 10,000 credit card with 25% interest will cost you $ 2,500 in interest next year. If your interest rate on this credit card is reduced from 25% to 15%, it will result in an annual savings of $ 1,000 that you could use to pay off your debt. A lower interest rate can make a huge difference in how long it takes to get out of debt.
Prepare Before Calling Your Lender
The credit card business is competitive, so your lender will tend to lower your rates if you appear to be a responsible borrower. At the very least, you want to create an image of someone who is well versed in their finances: you should know your interest rate (usually in the upper right corner of your credit card statement), current balance, payment history, and credit rating. … It’s also a good idea to look into other low-interest cards, or better yet, have a real offer in hand, such as those pre-approved in the mail.
How to call
Flip your credit card over and call the number provided. When speaking with a lender’s representative, picture yourself as a borrower who is responsible but struggling to pay off the debt at the current interest rate. Be polite but firm. Convince your lender that with the lower rates you can make consistent payments, otherwise you will have to look for other cards and consider a bank transfer. Reporting unemployment or other financial difficulties honestly can also help you substantiate your position.
Your lender is more likely to agree if you have a history of timely payments and a good credit rating (above 670). However, if they tell you that they can’t lower your rate, don’t argue, just ask them politely for reasons that will help you figure out what you need to work on next time (for example, there are ways to improve your credit rating. ). At this point, you can also ask for a temporary grace period, such as a 2–3 point cut in the rate over the course of the year, or a waiver of the annual fee .
Even if you don’t succeed, you can wait a few months and try again – it never hurts to ask .
This story was originally published in 2017 and was updated on November 4, 2020 to update links and include new information.