Check Your Payment History
Look over monthly statements. Familiarize yourself with what you pay and if you pay on time. You want to have a discussion from a position of knowledge, rather than have the credit card company bring up a payment history youre not aware of. Hardships like unemployment, divorce, an illness, or something else that caused a financial setback and led to missing payments are things to bring up. Stress that youre committed to being a good customer and paying on time.
How To Get A Lower Interest Rate On Your Credit Card
If you have credit card debt and youre ready to start paying it off, then you are probably thinking about how to make your repayment more efficient. There are two variables in the equation that make your debt expensive: principal and interest. Principal is the amount you have charged to the card, and you cannot do much about that now . Generally, you are stuck repaying the principal in full.
Interest, on the other hand, grows over time even if you dont make future purchases. However, you canlower your interest expenses. You can minimize interest by paying down your principal. And, you can lower the interest rates on your credit cards, which will lower your interest costs over time.
Why this Matters
The primary reason for lowering your interest rate is to save money! This is especially helpful if you have debts on multiple cards and are trying to dig yourself out. Every bit of savings helps. Here is a quick example of how much you could save by lowering your interest rate.
Imagine you have a $10,000 balance on a credit card that charges 18 percent APR and has a minimum payment of $250. The NFCC credit card payment calculator shows that this account would cost you $5386.23 in interest before the account is paid off.
If you lower the interest rate to 12 percent instead of 18 percent, and make the $250 monthly payment, then you would only pay $2834.67 in interest expenses. That one small change of lowering your interest rate would save you $2,551.56!
Open a New Card
How I Got 3 Major Credit Card Issuers To Lower My Interest Rates
If youre concerned about the possibility of carrying a credit card balance during the coronavirus pandemic, you may be able to lower your interest rates by contacting your card issuers right now.
I reached out to five major credit card companies to see if they would lower my interest rates. Ill share the results in this article.
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How The Fed Rate Cut Affects Existing Credit Card Debt
A 1% decrease in your interest rate seems pretty sizable, but in the grand scheme of things, it won’t really help you get out of debt much faster.
For instance, say you have a $6,000 balance on a card with a 15.24% APR and you plan to make $200 monthly payments until your debt is paid off. At that rate, your payoff plan would look like this:
- Total payoff period: 39 months
- Total interest charges: $1,601
If your rate is lowered to 14.24%, you’d pay this debt a little faster, with some savings:
- Total payoff period: 38 months
- Total interest charges: $1,460
The 1% decrease in your APR would save you $141 in interest payments, and you could pay off your debt one month faster.
No Means A New Opportunity
Of course, there is still the chance the answer is no. After exhausting all possible venues, and still receiving a no from your current card company, your next move is to find a new credit card company.
Make good on your promise of switching issuers by exploring other offers. Several cards have a 0% interest introductory offer on balance transfers for 12, 15 or even 18 months. Note that some of these cards do charge balance transfer fees, so its important to research which ones best fit your current financial situation.
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Ask About Your Lenders Financial Hardship Policy
You dont necessarily need a good credit score to convince your lender to give you a break. Your credit card issuer may be willing to lower your interest rate or work out some kind of alternative repayment plan if you can demonstrate that you are genuinely going through financial hardship, maybe due to a job loss or medical issue.
Check with your lender to see what kind of policies it offers and write down why specifically you are having trouble paying your debt. Lenders dont want you to default on your loan and so they may be more willing than you think to work out a plan.
You may also want to consider enlisting the help of a nonprofit who can help you go over your financial situation and give you some advice for requesting a lower rate.
You can contact a certified credit counselor at:
If youre really having a hard time paying your bills and decide to enter a formal debt management plan, a credit counselor will even negotiate with lenders for you. However, unlike basic credit counseling, this service generally requires a fee.
Leveraging Assets For Lower Interest Rates
Borrowing from your assets, usually a home or car, to pay off credit card debt isnt advisable because it turns unsecured debt into secured debt. That means you are putting an asset at risk if you wind up in default.
The upside is that because you are taking out a secured loan , the interest rate will be much lower than what you would get for a personal loan or credit card.
Home equity loans and home equity lines of credit are two option. Borrowing from your 401 is another, but it shouldnt be considered seriously. 401 loans rob you of the benefit of compound interest and put you at risk of penalties. All of that to borrow from an asset that is protected in bankruptcy.
If you arent sure about which option works best for your situation, give the at InCharge Debt Solutions a call. We can evaluate your finances for free and make personalized recommendations.
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How To Get A Lower Apr On Your Credit Card
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The best way to avoid getting hit with charges is to pay your balance in full every month. But if you end up carrying debt, there are a few ways you should consider lowering your APR.
Lower Interest Rates By Consolidating Credit Card Payments
If negotiating your interest rate doesnt work out, you can look to debt consolidation to lower interest rates. There are several different ways to consolidate debt, but the overall goal is to lower high interest and combine your debt into one easy-to-manage payment.
Its always important to keep track of your credit report to see where you stand and if some debt consolidation methods, like applying for a credit card to consolidate the other cards onto, is lowering your score.
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How To Take Out A Personal Loan
If you decide to take out a personal loan to help reduce how much you pay in credit card interest, follow these four steps:
Consider All Of Your Options
While negotiating a lower interest rate on your current credit card is a good strategy, it’s not the only one. And, it may not be successful.
Another option is to apply for a new card, especially a low interest or 0% Intro APR credit card, and to transfer your balance to that card. Of course, there is always the question of whether or not you will get approved for a new card. Also, if the rate on the card goes up after an introductory period, you will still be faced with the same issue: how to get a lower rate on your current card.
If you cannot make your payments and are in danger of defaulting, it may be time to take a more urgent step. can offer free money advice, no matter your financial situation, and help point you in the right direction.
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Debt Consolidation Loans Beat Credit Card Rates
Personal loans, also known as debt consolidation loans, are another strategy to lower your credit card interest rate. Banks offer lower rates on personal loans than on credit cards, but again, this will depend on your credit score.
If you can qualify for a loan, you can use the money to pay off your credit card balances. That leaves with you just the debt consolidation loan to pay off.
Call Your Card Issuer
Once youve gathered enough information to argue your case, call your card issuer and politely ask to speak with a representative about lowering the APR on your card. Make sure you have your notes in front of you and be prepared to bring up your research or additional details about your personal experience if a customer service representative is slow to offer you a better deal. If you get a no, dont be afraid to call back another time or ask to speak with someone else. A different representative or supervisor may be more receptive.
Figure Out Your Credit Score
Some of the first things your credit card company will look at are your payment history and credit score. You can order a free annual credit report to ensure it’s accurate and to see your payment history and debt-to-income ratio . Reviewing the report — checking for late payments or other blemishes — will give you a sense of how assertive you can be when asking for a lower rate.
Read more: The best credit monitoring services
Pay Less For Your Balance With Low Interest Rates
While the best way to avoid paying interest fees on your credit card balance is to pay it off entirely each statement cycle, sometimes reality dictates the need to carry that balance. In these cases, obtaining a lower credit card interest rate can give you the breathing room you need to pay down your debt without struggling to also make giant interest payments.
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Consider This Before Paying Off Credit Card Debt With A Balance Transfer
While a balance transfer credit card can help you get out of debt, keep in mind there are often restrictions. Balance transfers typically set maximum limits to the amount of debt you can transfer , and transfers between cards from the same bank aren’t allowed.
As a rule of thumb, read the fine print before requesting a balance transfer to know what terms apply. And be aware that having good or excellent credit is often required to qualify for a balance transfer card.
Here are some of CNBC Select’s favorite balance transfer cards.
0% for 21 months on balance transfers 0% for 12 months on purchases
5% of each balance transfer $5 minimum
Foreign transaction fee
Earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, gas stations and when you pay using PayPal, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases – automatically.
Discover will automatically match all the cash back you’ve earned at the end of your first year.
0% for 18 months on balance transfers 0% for 6 months on purchases
3% intro balance transfer fee, up to 5% fee on future balance transfers *
Foreign transaction fee
Get Free Advice About Dealing With Debts
If you need more support or dont know where to start paying off debts, youre not alone.
Nearly half of people in debt told us they arent sure about the best way to pay off their debts, and that is where a debt adviser can really help you. make the right decisions so most of your money will go to paying off your debts. This means you could be debt-free sooner than you thought.
A debt adviser will:
- treat everything you say in confidence
- never judge you or make you feel bad about your situation
- suggest ways of dealing with debts that you might not know about
- check you have applied for all the benefits and entitlements available to you
- always make sure you are comfortable with your decision.
Three quarters of people who get debt advice feel more in control of their finances afterwards.
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Request A Reduced Rate Directly From Your Issuer
If youd prefer to keep your current card but still want a lower interest rate, you may have success contacting your issuer directly and requesting a decrease in your rate. In fact, according to one survey, your odds are fairly good 69% of surveyed cardholders who asked for a lower rate were able to negotiate a rate reduction with their issuer.
Interest rate decreases can be requested by calling your issuers customer service department. You can do a few things to increase your chances of success when you call, starting with a little research into your credit situation. Interest rates are based on creditworthiness, so knowing where you stand and being able to demonstrate it for your issuer can go a long way toward proving that youve earned a break on your interest rate.
You can contact your issuers customer service department to request a rate reduction.
Youre also more likely to be approved for a rate decrease if the rate you ask for is reasonable few companies will drop your rate to zero just because you asked nicely. To determine what might be a reasonable request, look into what rates the issuer offers on the card.
Most credit cards have a predetermined APR range from which your exact interest rate is assigned based on your credit. Ranges can cover 10 percentage points or more and will often vary based on the prime rate.
Make Your Payments In Full And On Time
Always make your payments in full and on time . Credit card companies can raise your rates if you fail to pay on time. They will be less likely to lower your interest rates if this is the case as well. That’s why it’s important to consistently pay your bills on time and in full. If you are considered a credit risk, you will not qualify for a lower interest rate.
Putting it simply, the steps for lowering your rate are very similar to that of raising your credit score. For example, you should focus on making your payments on time and work on getting your balance lower so that you are not too near the credit limit.
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How To Negotiate A Lower Interest Rate On Your Credit Cards
Everything you need to know when haggling for a better APR.
can be a convenient way to pay for things while building credit and earning rewards. Those benefits, however, can be acutely undermined by a high interest rate. Currently, the average credit card interest rate in the US is 16.15%, according to CreditCards.com. At that rate, paying off a balance of $10,000 over four years would cost you an extra $3,422.
An open secret of the industry is that credit card interest rates are negotiable. And we’ll tell you exactly how to do it.
Tips For Getting A Lower Interest Rate
The best way to tackle high interest rates depends on the specific nature of your situation. For starters, if you always pay your credit card bill in full, you dont need to worry about interest rates. Theyre just inconsequential numbers in your situation so dont let them distract you from your primary objective of minimizing fees while maximizing your rewards earning capabilities.
If youre carrying a balance from month to month or anticipate incurring debt in the future, your options vary based on your credit standing and level of indebtedness.
If you have good or excellent credit, your first step should always be to compare other available credit cards in order to find one that would better meet your needs and then ask your current creditor if they can match that deal.
Creditors often grant rate reductions to consumers who have improved their credit standing in recent months or years, especially those whove managed to consistently pay at least the minimum amount required by the due date. Regardless, you have the upper hand in this situation because your credit profile is attractive enough to warrant improved terms relative to your current card elsewhere on the market. So dont be content with a simple rate reduction if far more attractive offers are attainable.
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