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How to Lower Your Credit Card Interest Rate

How to Lower Your Credit Card Interest Rate

Credit card interest rates: it’s like a huge hole in your pocket hemorrhaging money. It’s a grudge expense, and who can blame you?

You already had the benefit of the credit, and now you’re paying for that privilege with every month that passes. The only benefit to you is an improved credit rating – provided you can keep up with the payments. Meanwhile, much of your monthly payment goes towards that interest. If only you could bring it down!

We investigate ways that you can slow down the outflow of money you spend covering interest. That will help you to get your debt paid off faster, and it will cost less overall. Best of all, some of these strategies will cut your interest rate down within days! What have you got to lose by trying? You certainly have much to gain!

What are your chances of success? Get this! A recent survey found that two thirds of people who ask for a better APR get what they asked for.

How to Lower Your Credit Card Interest Rate

Negotiate with your credit card provider

Did you think you had to take your exorbitant APR lying down? You don’t, but most people just accept it without a murmur. A little negotiation could be all it takes to get a much more favorable rate.

But why should they give you a lower rate? They’re scared you’ll jump ship. In fact, it might be a good idea to do just that, even if they do accommodate you. We’ll see why soon.

Obviously, you can’t just barge in and start making demands. What you need is a few bargaining chips:

  • You’re a good credit risk or your credit rating has improved.
  • You pay your accounts on time, every time.
  • You are an established client (this is particularly strong when you have multiple accounts)
  • You’ve seen lower interest rate offers at other banks.

Not sure how to handle this without either coming across as overbearing or namby-pamby? There are open-source scripts available online for this negotiation that you can use as a guideline.

How to Lower Your Credit Card Interest Rate

Top negotiating tips:

  • Know what your bank’s competitors offer.
  • If you have multiple cards, start with the oldest one.
  • Be in your comfort zone: you could even do your negotiating by phone.
  • Be firm but pleasant. “Would it be possible to speak to your manager?” is a fair request when you aren’t getting any joy.

Can you see where this is going? You will tell your bank:

  • That you like doing business with them… BUT
  • You have seen better offers from other companies.
  • You’d like them to match it, OR
  • You’ll have to consider transferring your business elsewhere.

Exercise money management skills to boost your credit rating

No bank wants to lose a client with a good credit rating, and apart from ensuring you don’t default on any of your debts, you can improve your credit score still further by paying down your debt faster than you are required to.

That can be a difficult balancing act if you’re already somewhat cash-strapped, but careful money management can get you there.

Interest is like a bet on your ability to pay off the loan. The worse your credit score, the higher it’s likely to be. Improve your score, and you’re ready to ask for and get a lower credit card interest rate.

Use balance transfer offers to your advantage

Just as your bank wants to keep you as a customer, its competitors are eager to steal you away. The introductory offer is commonly used to do this, and the potential benefits that accrue to you is what makes this strategy so successful.

Look for offers that give you interest-free credit for an introductory period. This is often a year or even longer. But don’t only look at that. Check out what APR you’re going to be hit with when the offer expires. If it’s comparable to your current rate, you don’t even need to pay all your debt during the introductory period to save.

BUT: use the opportunity to pay your debt off or reduce it as fast as possible while you aren’t paying any interest. It’s the only way to maximize the benefit.

Things to consider as you look before you leap:

  • How long is the 0% interest offer going to last?
  • What are the balance transfer fees?
  • What annual fees are levied?
  • Are there any other charges?
  • What is your APR after the “honeymoon” period?

If at first you don’t succeed

If your negotiations don’t bear fruit and moving to another bank doesn’t look like a good option, improving your credit score is the next step. The better it is, the more likely you are to succeed when you reopen negotiations in a few months’ time.

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How to Lower Your Credit Card Interest Rate

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About the author

Irina Vasilescu

Irina Vasilescu is our money-saving and DIY expert and also the editor-in-chief as she's always on the lookout for the latest online deals.

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