How to lower your credit card interest rate

One of the big misconceptions about credit card debt is that the cards themselves are bad. The truth is, they really aren’t. Rather, it is the effect of double-digit interest rates that makes them so toxic to our personal finances. The exponential growth of an account balance quickly turns purchases that we thought we could easily pay off in a few months into something that seems to take years to knock out.

Fortunately, ridiculously high-interest rate don’t have to be part of your credit card experience. It is possible to negotiate for a lower interest rate if you know who to talk to and what strings to pull. If you can do a little homework to get into your credit card company’s head and are willing to spend 15-20 minutes on the phone, there’s at least a chance you can save a few bucks over the next year.

Key points to remember

  • Customers can negotiate lower interest rates with credit card companies.
  • Seeking to negotiate a credit card rate can be a good solution in various situations.
  • Asking for a lower rate should not affect your credit score or your credit account.

Why try to lower your price?

You’re probably reading this article because you’ve decided to step in and have a fight with your credit card. debt. With this in mind, it is crucial to realize that even a small reduction in your credit card amount annual percentage rate (APR) can shorten the time it takes to become debt free.

Consider a credit card with a balance of $10,000 that charges 25% per year. All things being equal, this credit card balance will cost you $2,500 in interest over the coming year. If you could lower your interest rate on that credit card from 25% to 15%, that would save $1,000 annually, which you could use to pay down more of your debt. A lower interest rate can make a huge difference in how long it takes to become debt free.

While this prospect may sound too good to be true, it is not. If you can get the right person at the credit card company over the phone, you can often negotiate the APR to a lower rate. Best of all, there’s no risk in asking. Unlike some other balance reduction techniques, such as debt settlement, simply requesting a reduction in your APR does not appear on your credit reportnor hiring a professional to help you.

Many people are surprised at how easy it is to get a rate reduction.

Understanding Your Credit Card Company

When you owe a large sum of money to a credit card company, it’s easy to start being afraid to talk to them. Maybe people think they’re going to get yelled at, be ashamed of the situation, or possibly be penalized. The reality is that credit card companies are in business to make a profit, and their biggest profit is made by charging interest to people with outstanding balances. The higher the balance, the more money the credit card company is able to make. In other words, if you have a large balance, you are one of their best customers. The credit card company should love you and want you to stick around to keep paying interest. This positioning is something you can use in your favor.

Most credit card companies don’t want to lose you or your balance, especially if you’re paying a rate that’s double or triple the historical rate. return rate in stock exchange. In fact, many credit card companies will go out of their way to keep you happy and free to spend, lest they go bankrupt. This fact is your most important lever when it comes to lowering your APR.

How to trade a lower APR

The process of reducing your credit card rate involves just a few steps, shouldn’t take more than 15-20 minutes, and doesn’t require any advanced negotiation skills. All it takes is having the right information in your hands and the right person on the phone. Here’s how to negotiate with credit card companies.

1. Assess your situation

Every customer’s situation is different. First, assess your own situation and set a goal to improve it. If you have a solid credit score, you can potentially collect competitive offers with lower interest rates. In other words, show your credit card company that you are seriously considering transferring your balance, its source of profit, elsewhere.

You can probably collect a pile of competitive offers just by letting your junk mail accumulate for a month. In this pile, you can find many balance transfer offers from other credit card companies offering temporarily reduced rates for transferring your balance.

You can also spend a few minutes checking the websites of major credit card companies for their balance transfer rates. Ideally, you want to find three to four offers for a long-term rate of around 10%. Some offers may be temporary, such as for 12 months or less.

If you are looking to negotiate your rate as a last resort before bankruptcy or debt settlement, you can also let them know. Many struggling people may ask to close their accounts altogether because it is too expensive to maintain.

2. Ask the right person

Then take your credit card, turn it over and call the customer service number on the back. Then keep pressing zero or whatever it takes to talk to a living person.

Be reasonable with the representative about your concerns. If you have found many other offers you qualify, let them know. Tell the representative that you have received many offers for a much lower interest rate from other credit card companies, but you don’t want to have to transfer your balance to another company.

If you’re asking for help as a last resort, you might want to let them know that you’re inquiring about closing your account, but would rather try to negotiate. Lowering your interest rate as an alternative to other debt settlement solutions can be particularly helpful when your debt became overwhelming. Many credit card companies are ready to offer you a deal if you are thinking of leaving.

Whatever your situation, you don’t necessarily have to take no for an answer. If a customer service representative says a lower rate isn’t possible, ask to speak to their supervisor. If you’re turned down, ask for the rep’s full name and customer service ID number – this usually scares the person off and they’ll want to get back to you ASAP.

When you meet the customer service manager, who is probably the person you wanted to talk to all along, you’ll want to introduce yourself again. Be even gentler this time. Be sure to tell the agent how much you liked having your account with the company and how much you would like to keep it. Also explain your case. There is at least a 50% chance, if not better, that your application will be accepted. Even if the company does not match a competitor’s rate, it can still accept some rate reduction. Any rate reduction will save you money, and the higher the agreed reduction, the better.

What to do after a decision

If you can get your rate down, it’s time to boost your path to debt elimination. First, try to get a written agreement from the credit card company to lower your rate, along with the corresponding fine print. Many people receive some kind of promise from a customer service representative only to find out that the rates haven’t been changed. Additionally, a credit card company’s agreement to lower rates may have terms attached that will raise your rate as high as it was or even higher than before if you don’t pay your bill on time. time or if you keep your balance below the Credit limit.

Second, make sure the money you save on interest is used to pay down your credit card or other debt. Now is not the time to go shopping or blow off steam on vacation with the extra money you save. Continue to make payments of the same amount you were making before your rate reduction.

If your credit card company refuses, ask about their rate reduction procedures. Also, see if there is a time period for review or reconsideration. Ultimately, if better rates and/or terms are offered elsewhere, it may be best to take advantage of them, possibly via balance transfer specials.

The essential

Remember that in the end, your balance is usually a valuable asset to a credit card company. Without its customers, the company loses the ability to earn a very attractive rate of return. By expressing in a non-confrontational but direct way that you’d like the company to help you stay a customer, there’s a good chance they’ll grant your request and lower your rate. Because there’s nothing to waste but a little of your time, anyone with a substantial credit card balance should try these techniques.

Alternatively, if your credit card company refuses to budge, you can always turn to that stack of balance transfer offers you made at the start. As long as they are among best balance transfer cards currently available, switching to a new card could be your ticket to a lower interest rate.

About Gertrude H. Kerr

Check Also

What credit score do you need for a personal loan?

Our goal at Credible Operations, Inc., NMLS Number 1681276, hereafter referred to as “Credible”, is …