Easy Steps To Lower Your Interest Rates
If you have credit card debt and pay over 20%, it’s time to look at ways to lower your card’s interest rates. Getting a lower annual percentage rate is easier than you think, especially if you've already paid down part of the debt. Follow this simple guide for great tips.
How To Negotiate a Lower Interest Rate for Credit Card Debt
Many people don't know that it's possible to request a lower APR by reaching out directly to the credit card company. You have nothing to lose and a lot to gain by trying to negotiate.
Do Your Homework
Get the credit card company on your side by putting together a convincing argument for a lower interest rate. See if the company has announced any special offers online. Gather advertisements from competitors that mention lower rates.
Mention the Benefits of Having You as a Client
If you’ve been faithfully making payments for months or years, you’re the type of customer lenders want to keep. They like getting paid. If you have good credit, be sure to emphasize that fact.
Ask for a Reasonable Rate
Now it’s time to turn on the charm. Politely but firmly ask the customer service representative to lower your interest rate. Be specific. Mention the percentage you feel you qualify for, usually based on advertised rates.
Suggest That You May Need To Look Elsewhere
If asking for a lower rate didn’t work, you still have an ace up your sleeve: competitors. Respectfully point out that other credit card companies are offering much lower rates. This tells your lender that they could end up losing your interest payments entirely, which may motivate them to accept your request.
Don’t Give Up
The first customer service agent you speak with is rarely the head honcho. If the CSR tells you a lower interest rate isn’t possible, ask for a supervisor. Stay friendly. You may get transferred directly to the right person. Try at least three times before giving up.
How To Do a Balance Transfer
If negotiating wasn’t productive, your next option is a balance transfer. This involves shifting the balance from a credit card with a higher interest rate to one with a lower interest rate. To maximize your benefits and avoid mistakes, follow these tips:
Look for promotional rates: Many cards that advertise balance transfers offer great rates to entice you to switch. Shop around a bit to find the best deal.
Calculate how much you save: Before agreeing to transfer your balance, check the fees. These are often 2–3% of the balance or a flat cost. If the amount you will save from having the lower interest rate is greater than the balance transfer fees, you have a winner.
Read the fine print: Some cards have important restrictions you need to know about. For example, purchasing new items can cause a higher interest rate to kick in. It’s best to avoid purchasing anything new on the card you’re trying to pay down.
Negotiating a lower APR or transferring card balances doesn't always work out, but the benefits are worth the effort. For example, if you pay $150 a month on a debt of $5,000, reducing the rate from 25% to 18% would save you $1,600 in interest! Isn't that worth 30–60 minutes of your time?