Credit cards can be a convenient way to pay for things while building credit and getting rewards. But a high interest rate can make these benefits much less useful. Most credit card rates are between 15% and 20%, which is a lot. At that rate, it would take you a few years and a lot of money to pay off a $10,000 balance.
Interest rates on credit cards can be negotiated. This is a well-known fact in the business world. And we'll tell you how to do it exactly.
First, what you need to know
Before you call your credit card company and start negotiating, you should do some work ahead of time.
Find out how good your credit is.
Your payment history and credit score are two of the first things your credit card company will look at. You can get a free credit report once a year to make sure it is correct and to check your payment history and debt-to-income ratio (DTI). Checking for late payments or other mistakes on the report will give you an idea of how assertive you can be when you ask for a lower rate.
Get bids from different places.
You should also look into the rates that other credit cards offer. (We suggest you look at our lists of the best credit cards to see which ones are the most competitive right now.) Save any preapproval emails or postcards you get, or look for similar cards with lower rates to see what other offers are out there. If you come to the conversation with information to back you up, you'll be in a better position to negotiate.
How to ask for a lower interest rate from your credit card company
When you're ready to ask for a lower rate, you can start negotiating. Here are four things you can do to lower your interest rate.
Call the card company: Contact the company that gave you your credit card and explain why you want the interest rate to go down. You could start by telling them how long you've worked with them and how good your credit is or how you've always paid on time. Now is the time to talk about any lower credit card rates you've been offered or found in your research.
Don't give up. At first, the credit card company might say no or offer a small discount, but you don't have to accept that if it doesn't meet your needs. You can always ask for more information or a reason why a decision was made. If you feel like your first phone call isn't going anywhere, don't give up. Call back and ask to speak to a different person, or ask to speak to a manager and make your case to someone with more power.
Ask for a different benefit: If the company won't lower your interest rate, ask what else it can do to keep you as a customer. Representatives may offer bonus points or other ways to keep you happy.
Request a temporary rate reduction. If you're worried about paying off a balance with your current high interest rate, ask for a temporary reprieve, which could give you a lower interest rate for a short time.
Alternatives to consider
There are other things you can do if your credit card company does not give you the discount you were hoping for.
Apply for a balance transfer credit card. Many balance transfer cards have introductory APRs that are either free or very low for a certain amount of time. After that, the APRs go up a lot. But it might buy you a little more time. Balance transfer cards always charge a fee for transferring debt, usually between 3% and 5%, so make sure the money you could save is more than the fee.
Create a debt repayment plan: Start (or tighten) a budget and make a plan to pay off your credit card debt more quickly. If you have balances on more than one card, use the "avalanche method" by making the minimum payment on all of them and using any extra money to pay off the card with the highest interest rate first. Work your way down the list until you've paid off all of them.
Apply for a debt consolidation loan. If you have high-interest credit card debt, a personal loan may be a good way to pay it off. With a debt consolidation loan, you could combine the balances of several cards into one loan with a lower interest rate.
The best advice is to never pay credit card interest.
The best way to avoid having to pay high interest rates is to never have to pay interest. Get in the habit of paying off your credit card balances every month so you never have to worry about how high your interest rate is. Sign up for automatic payments to pay off your entire balance every month, or pay every time you use your card.
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