Learning to lower your credit card interest rate isn’t difficult, it just requires a bit of research and preparation. If you’re carrying a big balance on a card with a high annual percentage rate, or APR, getting the rate lowered can save you money and reduce the amount of time it takes you to pay off your balance. You’re far more likely to succeed in your negotiations when you’ve had an account open for a while and made on-time payments consistently.
Here are the steps to take.
Step 1: Review Your Credit Card History
It’s definitely possible to negotiate the interest rate on your credit card, but you’ll improve your odds if you do a bit of homework. First, look at your statements to determine your current balance and your interest rate.
Next, think about your history as a customer. Target your oldest accounts first, because those credit card companies are more likely to try to retain you as a customer. It also helps if you’ve consistently made at least the minimum payment amount on time.
Then, research offers from other credit card companies, looking for rates that are more competitive than your current rate.
Step 2: Call and Ask for a Lower APR
This might sound too obvious, but the next thing to do is simply call your credit card company and politely ask for a lower interest rate. Explain why you’re requesting a lower rate. For example, maybe you’re trying to fast track your debt payoff. Be sure to mention how long you’ve been a customer — the longer, the better — and brag about your excellent payment history if you have one.
If you don’t get an immediate yes, try asking for a temporary rate reduction. You may be able to qualify for a small one-year reduction, which can still help you save money on interest. Every little bit helps.
In the event you still don’t receive a reduced APR, ask the customer service rep how you can qualify for a lower rate in the future. Maybe you can work on improving your credit utilization or make on-time payments for a longer period of time. In a few weeks or months, call back and try again.
Optional Strategy: Get a Balance Transfer Card
If you can’t negotiate a lower APR, another option is a balance transfer card with a lower APR. Often, credit card companies offer low promotional rates for a temporary period of time when you move a balance over from another card.
In a best-case scenario, you may even be able to qualify for an introductory 0% APR. However, you’ll likely need to pay a balance transfer fee, which can be 2%-5% of the amount you’re transferring.
Before you make a transfer, though, have a game plan, because if you miss a payment, you’ll likely lose that low APR and could be charged a penalty that ends up costing you more than your original credit card’s interest rate.