Best Strategies to Lower Your Credit Card Interest Rate
If you have a balance on your credit card, you pay interest. First things first: figure out how to avoid those interest charges altogether. Otherwise, the easiest way to reduce your credit card interest payments is surprisingly simple: just ask. Many cardholders overlook this simple approach, potentially leaving money on the table. Here’s how to lower your interest rate so you have a better chance of paying off your credit card debt.
Assess your current situation
Before you take any steps, it is important to understand your current financial situation. Start by checking your credit score and payment history, as these factors have a significant impact on your negotiating abilities. Then compare your current interest rate to what’s available in the market for similar credit profiles . This research will give you a realistic idea of what you may qualify for. Finally, calculate how much you could potentially save with a lower rate. This number will not only motivate you, but will also set a specific goal for your negotiations.
Prepare before the call
Preparation is the key to any successful negotiation. Start by gathering information about competitors’ offers, especially those you’ve recently received by mail or online. They can provide leverage during your conversation. Make a mental note of your account’s positive history, including how long you’ve been a customer and your history of on-time payments. Be prepared to discuss your loyalty as a customer, highlighting any other accounts or services you have with the same establishment.
Making a call
When you’re ready to negotiate, contact your card issuer’s customer service team. Ask to speak with a representative specifically about lowering your interest rate. Remember to be polite but firm in your request. Your behavior can significantly affect the outcome of the conversation. Approach the call with confidence, knowing that you have done all your homework and have a strong case for lowering your rate.
What to say on the phone
During the conversation, focus on highlighting your good payment history and loyalty to the company. Mention the best offers you have received from competitors, using them as a point of comparison. State the specific price you are looking for based on your research of current market offerings. Remember, the representative may not agree to your first request, so be prepared to negotiate.
If they don’t agree
If the representative doesn’t agree to lower your rate, don’t give up. Ask to speak with a manager who may have more authority to adjust rates. Find out about temporary promotional rates that may provide short-term relief. If all else fails, consider transferring your balance to a card with a lower rate, but be sure to factor in any balance transfer fees when calculating your potential savings. Remember, even if you don’t succeed on your first try, you can always try again in a few months, especially if your credit score improves or your financial situation changes.
How much can you save?
There’s no guarantee that your credit card company will approve a lower interest rate, but the potential savings are worth a shot. According to LendingTree , the average cut people receive is 6.3 percentage points. Moreover, according to the same 2023 survey , more than three out of every four cardholders who asked for an interest rate reduction on one of their credit cards received it.
Depending on your circumstances, this reduction could save you $500 or more in interest. Let’s say the cardholder has a credit card balance of $5,000 and pays $250 per month.
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Lowering the rate by 6.3 percentage points from 23.84% to 17.54% saves $478 and two months’ worth of payments. That adds up to $1,436 over 26 months (versus $958 over 24 months).
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A rate reduction of 6.3 percentage points from 27.00% to 20.70% saves $532 and two months’ worth of payments. That adds up to $1,717 over 26 months (versus $1,185 over 24 months).