7 Ways to Lower Your Credit Card Interest Rate

By Mikey Rox. Last updated 21 April 2015. 0 comments

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A high interest rate can slow any efforts to pay off a credit card, and the higher your rate, the higher your minimum payments. Fortunately, you don't have to take this type of abuse from your credit card company. You have options — and if you're ready for better credit terms, here are seven tips to lower your credit card interest rate. (See also: Best Credit Cards with Low Interest Rates)

1. Be Realistic About Your Credit

As much as you like the idea of getting a better credit card rate, it's not going to happen unless your credit justifies a lower rate. (See also: How to Use Credit Cards to Improve Your Credit Score)

Credit card companies take several factors into consideration when assigning rates. People with the best credit scores typically receive the most favorable rates. These individuals pay their bills on time and they don't have a lot of consumer debt. So before you ask for a better rate, check your own credit and know your standing. Your odds of a rate reduction are favorable if you have a credit score in the 700 or 800 range.

2. Research and Compare Interest Rates

Research and compare rates offered by other credit card companies. This helps you determine whether your current interest rates are competitive, or whether you can do better elsewhere. Several websites offer credit card comparison tools where you can search and apply for credit cards that match your unique needs.

3. Make Sure You Pay on Time

Credit card companies will look for any excuse to keep your interest rate the same. Even if you have an okay credit score, a single late payment in recent months can hurt your chances of getting a better rate. Some credit card companies might overlook one late payment if you have a good track record, but this isn't always the case. To illustrate, my friend who has a 760 credit score couldn't negotiate a better credit card rate because she paid her bill three days late four months prior to her request. It was an accidental oversight, and before this incident she had a perfect payment record — but it didn't matter. Make sure you pay bills on time every month. Set up reminders or automatic payments to ensure a due date doesn't slip your mind.

4. Pick up the Phone

Don't just talk about getting a better interest rate — get on the phone with your credit card company and request one. I've done this several times throughout the years, and in most cases, the customer service representative lowered my interest rate on the spot. But some reps will make you work for a lower rate. They'll say your current rate is the best they can do — and in some cases, it is. But if you always pay on time and you're a long-term customer, you might need to put on your negotiating hat to get what you want.

5. Speak With a Supervisor

The customer service rep might be unable to lower your rate, but a supervisor might meet you halfway. If you can't get a permanent interest-rate reduction, ask a supervisor for a temporary reduction of your rate. Some credit card companies will offer a temporary reduction, but only if you ask for it. The company may reduce your rate by several percentage points for a period of six to 12 months. Your interest rate reverts to the standard APR after this period. It's only a short-term break, but any reduced rate is better than none. This is an opportunity to save money on interest and pay down the card faster, and you'll never benefit from it if you don't ask. (See also: Best Credit Cards with 0% Balance Transfer APR)

6. Play Hardball

Since you've already researched and compared other credit card offers, use this information as a bargaining chip if the credit card company isn't willing to budge with your rate. Let the rep know that you've found similar cards offering better rates and you're considering transferring your balance. In an effort to keep you as a loyal customer, the company might lower your interest rate and match a competitor's offer. Only play this hand if you're absolutely serious about making a switch.

7. Call Back Another Day

Maybe now's not the right time to get a lower interest rate; your credit score might not meet the creditor's requirements for a prime rate. Don't give up. Continue to add points to your credit score by paying bills on time and paying off debt. Wait a few months and then call back. You might speak with a different rep or a different supervisor, and if your credit score has increased, the company might willingly comply with your request for a better rate.

Do you have more tips on how we can lower our credit card interest rate? Let me know in the comments below.

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