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Will My Credit Card Company Lower My Interest Rate

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Lower Interest Rates By Consolidating Credit Card Payments

How Do I Get My Credit Card Company to Lower My Interest Rate?

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.

How To Lower Credit Card Interest Rates: 4 Options

There are a few possible ways to pay less interest on your credit card, such as asking your card issuer for a lower rate or consolidating your debt with a personal loan.

Edited byAshley HarrisonUpdated October 1, 2021

Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”

A high-interest credit card can be a major burden on your finances. The average credit card interest rate was 14.75% as of February 2021, according to the Federal Reserve which could translate into steep interest charges if you only pay the minimum payment each month.

However, there are ways to potentially lower your credit card interest rate, which could help you save money while paying off your balance.

Heres how to lower credit card your interest rate:

  • Take out a personal loan
  • Pay Off Your Cards In Order Of Their Interest Rates

    If you have credit card debt on multiple cards, some personal finance experts recommend paying them off according to the size of the balance, starting with the smallest. The idea is that the quick wins will give you momentum and motivation. However, it will save you the most money to pay your cards off in order of their interest rates, starting with the highest-rate card and moving to the lowest.

    » MORE:

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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:

  • Check your credit. Like with credit cards, personal loan lenders will review your credit to determine your creditworthiness as well as what rates you qualify for. To see what shape your credit is in before you apply, use a site like AnnualCreditReport.com to review your credit reports for free. If you find any errors, dispute them with the appropriate credit bureaus to potentially boost your credit score.
  • Compare lenders and pick a loan option. Be sure to consider as many lenders as possible to find the right loan for your needs. Consider not only interest rates but also repayment terms and any fees charged by the lender. After researching lenders, choose the loan option that works best for you.
  • Complete the application. Once youve picked a personal loan lender, youll need to fill out a full application and submit any required documentation, such as tax returns or pay stubs.
  • Get your funds. If youre approved, the lender will have you sign for the loan so the money can be released to you. The time to fund for a personal loan is usually about one week though some lenders will fund loans as soon as the same or next business day after approval. There are also lenders that will pay your creditors directly if youd prefer.
  • If Your Request For An Interest Rate Reduction Is Denied

    How I Got 3 Major Credit Card Issuers to Lower My Interest ...

    If they tell you they cant lower your rate, dont argue. Politely ask them why it can help you work toward improving the negatives. You can call again in a few months if youve made some headway.

    If your credit score or amount of credit owed are barriers to getting the interest rate lower, and you feel like its going to take too much time to make changes that will see results, its time to consider consolidating your credit card debt.

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    Check Your Credit Score

    Your credit score helps determine what kind of interest rates you qualify for. In general, the better your credit score, the lower your rate.

    If youd like to get a lower interest rate, youll likely need good to excellent credit a good credit score is usually considered to be 700 or higher. This is why its a good idea to check your credit before making the request so you know where you stand.

    Tip:

    Learn More: How Personal Loans Impact Your Credit Score

    What Exactly Is A Credit Card Minimum Repayment

    • The balance on your account at the beginning of a particular statement period.
    • The amount you owe at the end of a particular statement period.
    • Minimum monthly repaymentThe minimum you have to pay each statement period. It is not recommended as a long-term solution because if you make only the minimum monthly repayments, you will pay more interest and it will take you longer to pay off your balance.
    • Minimum payment due dateThe final day by which you have to pay at least the minimum monthly repayment amount to avoid late payment charges.

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    When Is The Interest On A Credit Card Charged

    If you pay your total due amount in full before the Payment Due Date, no Credit Card fee is applied to your account. However, you might have to pay the interest in the following scenarios:

    • When you skip paying the Credit Card bill by the Payment Due DateIf you dont pay the Credit Card bill altogether, you will be charged interest on the outstanding amount as well as on any new transactions made after the due date, till the previous balance is cleared. Also, a late payment fee will be applied to your account.
    • When you pay only the Minimum Due amountThe interest will be charged not only on the balance amount but also on all the fresh purchases made until the previous amount is paid in full.
    • When you pay less than the Minimum Due amount Not just the balance, but full amount will attract interest along with any new purchases made till the time the previous amount is paid in full.
    • When you withdraw cash using a Credit CardYou can also use your Credit Card to withdraw cash American Express doesnt charge an interest on the Cash withdrawal.

    Open A Credit Card With An Introductory 0% Deal

    FAQ: How Do I Lower My Interest Rate on My Credit Card?

    One way to bring down the interest rate on your credit balance is to transfer it to a card with an introductory 0% promotion. If your credit is good enough to qualify for one of these offers, you could end up dodging finance charges for a long time.

    But keep in mind that there are a few things to watch out for with balance transfers. The first is fees most credit cards charge a 3% fee for transferring a balance. This could significantly cut into the overall amount youre saving.

    TIP: Check out our tool to figure out the true cost of your balance transfer.

    Be mindful of making your payments on time. Missing even one could cause your introductory deal to be canceled, and interest may start accruing right away. Also, you should make your best effort to pay off your balance before the 0% period ends. Again, interest will eventually start accumulating if you carry a balance beyond that point.

    » MORE:How is credit card interest calculated?

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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.

    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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    Speak With A Supervisor

    If you speak with a representative thats not cooperative, simply ask for a manager. Customer service representatives may not have the power to modify an account. But their direct supervisor probably will, especially if you have a sensible reason for lowering your interest rate. Dvorkin says, If youre denied on your first try, hang up and try again at a later date. Some reps are more responsive than others but its essential to ask for a supervisor.

    First Citizen Citi Credit Card

    " How Can I Lower the Interest Rate on my Credit Card ...
    • The First Citizen Citi Credit Card from Citibank is available at a regular interest rate as low as 2.5% pm and a cash advance fee of 2.5%. The card comes with a facility to earn reward points on shopping at exclusive retail stores in India. You also get a fuel surcharge waiver on purchasing fuel at authorised fuel stations in India. The annual fee is also waived off if you spend Rs.30,000 and above on your credit card annually.

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    How Can I Reduce The Chances Of My Credit Card Provider Increasing My Interest Rate In This Way

    There are no firm rules. Thats because credit card providers may take different things into account. But, it would help if you:

    • make sure you pay your monthly payments on time
    • reduce the amount you owe whenever you can
    • make sure that you keep up with payments on your other types of credit
    • keep within your agreed credit limits and
    • consider closing any accounts you no longer use or need.

    S To Reduce Your Credit Card Interest Rate

    Is your credit card interest rate 18% or higher? Call the number on the back of your card, tell them you have seen lower rates and chances are that you can get them to lower it. Its not always that simple, of course, but its a start.

    Your best leverage during the is if you have a recent offer in the mail with a low introductory rate of 0%-10%. Many credit card issuers are willing to drop your rate if there is the chance that you will take all of your money elsewhere. Theyd rather have you pay some interest than ditch them and pay no interest at all.

    If you dont have a recent offer, check out the best current offers on low interest credit cards and balance transfer credit cards. Anytime you can offer a concrete possibility for switching to someone else, you have a bit of leverage during the phone call.

    If you have been paying your minimum payment on time and they consider you a good customer, they will likely be willing to work with you to negotiate a lower rate. If, even after you have mentioned that you will switch your business, and they still refuse to lower your rate, remain polite and make ready to transfer your balance.

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    Credit Cards Are Unsecured Loans

    Besides the segment of secured credit cards that allows beginners to have a credit line equal to a security deposit they pay upfront, the majority of credit cards are unsecured loans.

    Unlike a mortgage or a car loan where the bank has collateral to take if the borrower doesn’t make their loan payments, there is nothing the bank or card issuer can collect from you if you’re late on a bill besides interest. With a credit card, borrowers are given a loan without any security that they will pay it back.

    “The lack of a physical asset acting as security means more risk for the issuer,” financial expert John Ulzheimer, formerly of FICO and Equifax, tells CNBC Select. “They can’t repo your dinner or your nice vacation that you paid for with your credit card. They take a default as a loss if they can’t collect from you.”

    This added risk translates into a higher interest rate to cardholders since it helps banks to subsidize the risk of issuing unsecured credit to millions of people.

    Federal student loans, which are backed by government funds if a borrower defaults,also carry less risk than credit cards and thus have lower interest rates. The average 15.78% credit card APR, according to the Federal Reserve’s most recent data, is more than five times higher than the 2.75% federal student loan interest rate for undergraduates for the 2020-21 school year. Even the federal rates for unsubsidized graduate student loans and parent loans don’t come close to credit card interest rates.

    How Can I Pay Off My Credit Card With High Interest

    “How Can I Lower the Interest Rate on my Credit Card?”

    If you want to reduce the balance faster, but can’t afford to substantially increase your monthly payments, try the following:

    Even if you don’t qualify for a lower interest rate or promotional credit card offer, call your lender and work out what amount you can afford to pay on the high interest rate card over time, and put that amount on auto-pay. Then cut up your card so that you’re not tempted to add any purchases to the balance.

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    Get A Low Interest Credit Card

    While itâs always recommended you avoid carrying a balance, if you anticipate youâll need to continue using a credit card for daily purchases to tie you over during a cash crunch, itâs best to use a low interest credit card.

    Some of the best low interest credit cards in Canada come with rates as low as 8.99% to 12.99%, which is well below the average of 19.99% found on most rewards credit cards. Just be sure to only use credit for absolute essential purchases, track your spending, and avoid splurging on nice-to-haves.

    Lowering Your Interest Rates Through Debt Consolidation

    Debt consolidation is a way of taking matters into your own hands and proactively attacking your debt. This is particularly a good solution if you have more than one high-interest credit card. Options range from debt management to other interest-bearing credit solutions. There are upsides and downsides to all of them, and none will eliminate what you owe.

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    What To Do After A Decision

    If you are able to get your rate lowered, it’s time to supercharge your journey to eliminating debt. First, try to get the credit card company’s agreement to lower your rate, as well as the related fine print, in writing. Plenty of people get a promise of some kind from a customer service rep only to discover that the rates have not been changed. Additionally, a credit card company’s agreement to lower rates can be loaded with conditions that will raise your rate as high as it was or even higher than before if you fail to pay your bill on time or keep your balance under the .

    Second, make sure the money you save on interest goes toward reducing your credit card or other debt. This isn’t the time to go on a shopping spree or blow off some steam on a vacation with the extra money you’re saving. Continue making payments in the same amount you were making before your rate was reduced.

    If your credit card company says no, ask them about their procedures for rate reductions. Also, see if there is a time period for consideration or reconsideration. Ultimately, if better rates and/or terms are offered somewhere else, it may be best to take advantage of them, potentially through balance transfer promotions.

    Ask To Have The Card Interest Rate Lowered

    Should I transfer the balance from my credit card to ...

    Once you are connected with a representative, this is the time to begin negotiating your rate. You may want to mention your good payment history, your loyalty to the company, or a high , if you have one.

    You should be polite when asking for an interest rate change. If you yell or become belligerent, then the customer service representative will not be as willing to help you. Politeness goes a long way in situations like these, though it is important to be persistent.

    Keep in mind that you may run into difficulties getting a reduced rate if you have a history of late payments, a low credit score, or a lot of outstanding debt.

    Your credit card company wants to continue to make money off of your account, so generally, it will not bring your interest rate down to zero. However, it probably also wants to prevent you from defaulting, so it may decrease your interest rate if you make a good case.

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