How to negotiate a lower interest rate on credit cards

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Credit cards can be a convenient way to pay for things while construction loan as well as receiving an award… However, these benefits can be dramatically undermined by the high interest rate. Currently, the average interest rate on a credit card in the United States is 16.15%CreditCards.com reports. At this rate, paying off the $ 10,000 balance over four years will cost you an additional $ 3,422.

It’s no secret that credit card interest rates are negotiable. And we will tell you exactly how to do it.

What you need to know first

Before calling your credit card company and initiating negotiations, we recommend that you prepare in advance.

Find out your credit score

The credit card company will first look at your payment history and credit score. You can order free annual credit report to make sure it is accurate and to view your payment history and debt-to-income ratio (DTI). View the report – checking late payments or other shortcomings – will give you an idea of ​​how persistent you can be by asking for a lower rate.

Read more: The best credit monitoring services

Collect competing offers

You will also want to examine the rates offered by competing credit cards. (We recommend that you familiarize yourself with our best credit card listings to see the most competitive offers right now.) Save all received emails or postcards with pre-approval, or search similar cards with lower rates to see what other suggestions there are. Going into conversation using information ammunition will give you a stronger negotiating position.

How to ask your credit card provider to lower your interest rate

Once you feel ready to ask for a lower rate, you can start negotiating. Here are four steps you can take to negotiate a lower interest rate.

  1. Call your card operator: Contact your credit card issuer and explain why you want to lower your interest rate. You can start by providing your history with the company and mentioning your good credit history or a history of timely payments. It’s time to mention any lower credit card rates that have been offered to you or discovered through your research.

  2. Disagree: The credit card company may initially decline your request or offer a minimum discount, but you don’t have to agree if the solution doesn’t meet your expectations. You can always ask for more information or explain your decision. If after the first phone call you feel like you’re not getting anywhere, be diligent. Call back another time and try your luck with another representative, or ask to speak with a manager and state your position to a higher authority.

  3. Ask for another allowance: If the company refuses to lower your interest rate, ask what else it can do to keep you as a customer; representatives may offer bonus points or additional incentives.

  4. Request a temporary rate cut: If you are worried about paying off the balance at your current high interest rate, ask for a temporary grace period that may offer you a lower interest rate for a short period of time.

Alternatives to consider

If your credit card company doesn’t give you the discount you hoped for, there are alternatives.

  1. Apply for a credit card with balance transfer: Many balance of transfer cards have low initial annual interest rates for a certain period, after which the annual rates rise sharply. But it might buy you time. That being said, it was noted that balance transfer cards always charge a debt transfer fee – typically 3% to 5% – so make sure your potential savings outweigh the costs.

  2. Make a debt repayment plan: Start budget (or tighten up your existing one) and plan to pay off your credit card debt faster. If you have multiple card balances, use the avalanche method by making the minimum payment on all cards – using any additional funds to pay the card with the highest interest rate first. Move down until they all pay off.

  3. Apply for a debt consolidation loan: BUT personal loan can be a practical way to pay off high interest rate credit card debt. In the case of a debt consolidation loan, you can combine the balances on multiple cards into one loan with a lower interest rate.

Best advice: avoid credit card interest altogether

The best way to avoid high interest rates is to avoid paying interest altogether. Make it a rule to pay off your credit card balance every month so you don’t have to worry about how high your interest rate is. Sign up for automatic payments to pay your balance in full monthly, or make payments every time you use your card.

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