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.
Improve Your Credit Score To Qualify For Lower Rates
While not necessarily the easiest method and hardly the fastest the surest way to consistently receive lower interest rates on your credit cards is to build up your credit score. Interest rates are based on financial risk, and your financial risk is determined based on your credit report and score. Those with excellent credit will consistently receive the lowest interest rates.
Since credit is so individualized, the exact actions you take to improve your score will depend on your particular credit situation. In general, however, the most effective way to improve your credit score is to address each factor that goes into the calculation. The two main scoring models, FICO and VantageScore, both use the same factors, albeit with different weights, to calculate your score.
Your payment history is the most important factor in both models, and it counts for a full 35% of your FICO score. This factor looks at whether you pay your debts as agreed, and can be damaged by late payments, missed payments, and account defaults. Always make on-time payments to ensure you are scoring well in this category.
Another important aspect of your credit score is your total debt and utilization. This looks at how much total debt you have, how much each of your individual debts total, and what portion of your available credit you are using. You can do well here by only taking on necessary debt and keeping your card balances low.
Ways To Lower Your Credit Card Interest Rate
The two main ways to lower credit card interest rates are to negotiate with the credit card company or to consolidate credit card debt into one lump sum with a lower interest rate. There are a variety of different means to do that.
Negotiating a lower interest rate, if successful, has an immediate effect on your monthly payment. It also doesnt have a negative impact on your credit score some consolidation methods include inquiries into your credit history and can reduce your score.
But if you are looking for a lower rate because your credit card debt is growing month-by-month with no end in sight, shaving a few percentage points off your rate wont make a big enough dent and youd be better off consolidating debt.
Consolidating debt, depending on which method you choose and your financial situation, can also have its downsides.
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Find Competing Card Offers
Tell your credit card company that you can get a lower rate from someone else. They dont want to lose your business if youre a good customer. You need actual offers to give this leverage. One place to start looking is your mailbox. If you use credit cards, you should be getting competing offers online and by snail mail.
There are chances you receive some new credit card offers with zero APR introductory rates in your junk mail, Abramson, of OverdraftApps, says. But dont try to bluff your way through make sure to have one of these offers handy in case the agent asks for more details.
Annual Fee Waivers And Reductions
Even though this was down from 92% a year earlier, the success rate should encourage any cardholder paying an annual credit card fee to reach out to their card companies. Ideally, you should submit your request before the fee is due rather than trying to have it credited to you after your card company charges you the fee.
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Have A Strategy Before You Call
When you’ve compiled your evidence and are ready to make your case, start calling your card issuers one by one, using the customer service number printed on your card. There’s no need to plan every word you’ll say, but it’s a good idea to have a general outline of what to say and do:
- Give the customer service rep a brief recap of your history with the company: how many years you’ve been a cardholder, how long you’ve been making monthly on-time payments, and so on. Tell them you’re seeking an interest rate reduction, and briefly state the reasons you think you deserve one .
- If the rep tells you they can’t change your interest rate, ask to speak to a supervisor who might have greater authority. Be polite but firm and persistent. Negotiating your interest rate is a perfectly reasonable thing to do.
- If you’re told a rate cut isn’t possible, consider asking for a temporary reduction. This can be an especially effective and helpful tactic if you’re seeking relief from a financial setback.
- Consider telling the issuer you’ll cancel the card if they’re unwilling to work with youbut only if you’re prepared to follow through on that promise. Note that the account will need to be paid in full before you close it, so this approach may ring hollow if you have a high balance on the card. Also keep in mind that cancelling a card reduces your total borrowing limit and will increase your overall utilization if you have outstanding balances on any other cards.
Studies Show That Most Apr Reduction Requests Are Approved
If you dont ask, youll never know. This expression applies to everything from job raises to loan applications. It is also very relevant to ask your credit card company for a lower interest rate. A recent survey by Lending Tree found that seven out of ten credit cardholder requests to lower the account interest rates were granted.
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Look Out For Interest
When it comes to credit, there are no quick fixes. And the Federal Trade Commission has warned of interest rate reduction scams that make those kinds of promises.
Hereâs how these scams often work: A company calls saying it can negotiate with your issuer on your behalf, claiming they have a special relationship. It may offer money-back guarantees and say itâs a limited-time offer to get you to sign up.
But the company charges fees and requires you to supply personal information. Once it has your information, it can make purchases with your card or sell the information to others. The FTC says not to give out personal or financial information and to hang up if you get a call like this.
Take Out A Personal Loan
Another option is taking out a personal loan to pay off your credit card debt a process known as debt consolidation. Personal loans often have lower credit card interest rates than credit cards, which means you could save money on interest charges while repaying your debt.
If youre struggling to get approved, consider applying with a cosigner. Not all lenders allow cosigners on personal loans, but some do. Even if you dont need a cosigner to qualify, having one could get you a lower interest rate than youd get on your own.
If you decide to take out a personal loan, its important to think about how much that loan will cost you. This way, you can be prepared for any added expenses. You can estimate how much youll pay for a loan using our personal loan calculator below.
Enter your loan information to calculate how much you could pay
Checking rates wont affect your credit score.
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How Do I Lower My Apr
How to Get a Lower APR on Your Credit Card
What To Do If Youre Denied A Lower Apr
If your credit card company denies your request, ask the issuer to provide an explanation. You can also ask what would make you better qualified for a lower rate, to have a clear understanding of what you need to do to improve your chances in the future.
If youre facing a period of hardship and arent sure how to overcome your debt, you may also consider speaking with a financial counselor to determine the best options for debt payoff based on your individual situation. There are alternative strategies, such as consolidation loans and equity loans to help pay off your debt based on your personal circumstances and finances.
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Improve Your Credit Score
Whether youre going to apply for a new credit card or trying to negotiate a lower APR on your current credit card, a good way to land a better interest rate is to take some steps toward improving your credit score. One of the easiest ways to give your credit rating a boost is to pay your credit card bill early or on time every month.
You should also refrain from opening too many new accounts, which leads to multiple hard inquiries on your credit report, and closing accounts, which can increase your . Both moves can negatively impact your credit score, along with other factors.
If you have a lot of debt in relation to your credit limits, you can also improve your credit score by paying off your debt. Most experts recommend keeping your credit utilization rate below 30 percent for the best results, which means maintaining $3,000 or less in revolving balances for every $10,000 in total credit you have.
How To Negotiate A Lower Credit Card Rate
Letâs get something straight: credit cards are a useful tool in your wallet.
They offer fraud protection on purchases, rewards such as points or cash back, and the ability to purchase something interest-free for 30 days. You start paying interest after those 30 days are up. And the interest is high most credit card interest rates are between 9.9% and 30%. If you pay off your credit card every month, maybe the high interest rate isnât a concern. If you donât, youâll be paying a lot of interest over a lot of years.
Letâs assume you have $1,500 on your credit card with an interest rate of 19% and you pay the minimum of $10 a month. It will take you almost 13 years to pay off that original $1,500, which will include an extra $1,448 in interest. Thatâs double the original amount on the credit card.
Fortunately, most Canadians pay off their credit card every month. For those who canât and for those who want a lower rate, there are ways to pay less interest while youâre paying off your credit card.
Do the research
Knowledge is power so before you ask for a lower rate, know whatâs out there and know your credit score. Youâll need both.
Start with your credit history and your credit score. You can get a copy from Equifax or TransUnion with minimal fees. This will provide a breakdown of your credit history.
Once youâve done your research, itâs time to get a lower rate.
Make the call
Make the switch
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What Does Annual Percentage Rate Mean
Annual Percentage Rate, or APR, determines the cost of credit for a year and is the interest rate you pay on a loan as it relates to credit cards, mortgages, auto loans, etc. APR is commonly used to compare individual products like a credit card from various lenders before you make your decision. APR can be fixed or variable. Most credit card issuers base their variable rate on the U.S. Prime Rate with an additional margin applied. There are also various types of APRs for credit cards like purchase APR, cash advance APR, or balance transfer APR. Learn more about what APR is and what it means to you.
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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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.
Take An Inventory Of Your Financial Health And Credit Standing
Your best path forward will depend on your monthly income and budget, your , your total amount of debt and your lenders credit card policies.
If you havent done so already, check your credit score to gauge how lenders view your financial health. Your credit history is critical to determining what options are available to you. So dont move forward until you know where you stand.
Its also a good idea to pull a free copy of your credit report from AnnualCreditReport.com. That way, you can check to make sure or unauthorized accounts arent dragging down your score.
Finally, look over your credit card statements and tally all of your balances. Then check the APRs for each open card. The debt on your highest rate card is the most dangerous to your budget, and so thats the card APR and balance you should ideally tackle first.
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What Is A Good Interest Rate On A Credit Card
The you’ll qualify for depends on your credit score, the type of card you’re interested in and overall market conditions.
One way to gauge whether a card’s interest rate is “good” is to compare it to the average. As of November 2019, the average interest rate on credit card accounts that charge cardholders interest was 16.88%. When negotiating a lower rate on your current cards, aim for a rate that’s lower than the average.
Keep in mind, too, that rewards credit cards will likely charge higher rates than cards that don’t offer airline miles or cash back. Similarly, credit cards aimed at those with fair or poor credit and retail credit cards often have higher rates.
Consider A Balance Transfer Credit Card Instead
Balance transfer cards may provide you an alternative for getting a lower interest rate on your current credit card debt. This may allow you to consolidate your existing balances from multiple cards onto a single, new card.
Youll want to use a credit card with a 0% introductory annual percentage rate, or APR, offer for balance transfers to save money on your debt repayment. Here are some cards to consider.
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Cons Of Balance Transfer Credit Cards
- Balance transfer fees: Most cards charge a balance transfer fee generally from 3% to 5% that could increase your balance.
- Higher interest rates: Credit cards generally have higher interest rates than personal loans. While you might be able to take advantage of a 0% APR introductory offer depending on the card carrying a balance beyond this period could lead to steep interest charges if you dont pay off the card by your due date each month.
- Might be tempting to rack up a balance: A balance transfer card is still a credit card. Even if you pay your initial balance off, it could be tempting to rack up a balance again.
Look For Lower Interest Rates
One of the first steps Orman advises for those looking to chip away at credit card debt is to see if you can lower your interest rates.
Doing this will help you pay off your debt faster and make sure more of your money is going toward knocking out what you owe, instead of accumulating interest.
There are a few ways to do this, such as a balance transfer to another credit card with 0% interest rates for a certain period, taking out a personal loan with a lower interest rate to pay off your credit balance or working with credit counselor to consolidate your debt with a lower rate.
These options will depend on your personal situation and your credit score, Orman said. For those with lower scores, she recommends reaching out to the National Foundation for Credit Counseling for assistance in lowering your interest rate and getting on a payment plan.
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Why Is The Interest Rate On My Credit Card So High
interest ratesso highhigher rate
. Just so, how do I get my credit card company to lower my interest rate?
6 Steps to lowering your credit card interest rate
can you negotiate credit card rates? If you currently carry a balance on your card and want to avoid incurring more debt, lowering the interest rate on your card can help. You can negotiate with your bank or company to get a lower interest rate on your card.
Additionally, can credit card companies raise your interest rate?
Finally, may periodically raise interest rates on for no particular reason. According to the CARD Act, they’re not allowed to do so if you’ve had the card for less than a year the only exceptions are if you are at least 60 days delinquent on payments or the prime rate increases.
Do credit card companies call you to lower your interest rate?
The FTC says that if you‘re looking to reduce the interest rate you‘re paying on your credit card purchases, your best bet is to handle it yourself for free: customer service phone number on the back of your credit card and ask for a reduced rate. Be calm, patient and persistent. or 1-888-382-1222.