How to Reduce Your Credit Card Interest Rate


The Fed has raised interest rates three this year.  As a consequence, most banks will probably increase the rates on their loans.

Have you wondered:

Instead of taking out new loans and credit cards, why don’t you consider reducing the interest rate on your existing ones?

A recent poll has revealed that 84% of the people who ask for better credit card terms receive them. What has the study found:

  • 87% got late payment fee waived
  • 69% managed to reduce their interest rate
  • 89% increased their credit limit
  • 82% got their annual fee waived or reduced

How to Reduce Your Credit Card Interest Rate

The Necessary Steps To Decrease Your Rate

So, it seems that most people don’t even try to do it. Not only can you manage to reduce your credit card interest rate but also achieve some other benefits.

Now, let’s take a look at some of the steps you can take to reduce your credit card interest rate.

 1. Maintain A Good Credit Score

Outstanding credit rating can always result in lower rates without even contacting your lender.

Why?

Credit score shows a borrower’s performance when it comes to paying their debts (If you still don’t know your credit score – learn how to find it). If you don’t delay payments and your debt is under control, your credit rating will be very high. This is a sign that you are a trustworthy borrower.

You might also consider requesting free credit reports.

They are provided by the three major credit agencies (Experian, TransUnion, and Equifax). These reports can open your eyes. Virtually. On paper you will be able to track down all your payments, history and everything you need to know regarding your bank accounts.

Don’t forget:

Perhaps there are some errors which might affect negatively your credit score. Be always on the move to dispute them and reverse the process. (If you don’t have credit, read how to get a credit card with no credit history).

Tip: How can you improve your credit score?

Most people pay each month only the interest on their loans. This increases non-stop the amount of money you own. Try to pay off some of your loans, not only the interest. Debt reduction improves significantly an individual’s credit score. As always, technology can help us a lot.

There are several cool apps that help you track your debt reduction.

It’s convenient and free. The sooner you get your financial situation under control, the better your credit score will be (See how to get your crdit score for free). Finally – bad credit it’s not the end of the world – there are great ways to repair your bad credit.

2. Negotiate With Your Lender

Face you card provider. This is very important because often banks want to keep their customers, and they can agree to lower your rate. However, convincing a bank to do that is not an easy task.

What steps can you make towards achieving this goal? If you still don’t have a lender – consider reading this.

3. Contact Your Card Provider

It might sound strange, but many people feel shy to ask about better terms. Others think this is not possible and is not worth the time and efforts.

But it is.

Remember the poll?

84% of the people who asked for better terms actually received them. It’s worth the effort.

4. Convince Your Bank

How to do it?

To start with, show them you make payments on time. Another ace up your sleeve could be the fact that you have been a client for a long time. This is a serious argument since banks appreciate loyal clients. Last but not least, tell them you have received better offers from other banks.

5. Be Flexible

First of all, you should be persistent. If you crack under the pressure,  you will not achieve anything. However, being too focused on the terms you want is not the best idea. Be flexible and ready to make compromises.

6. Transfer your balance

Let’s imagine negotiations failed. After all, there are two sides – sometimes your lender is simply unwilling to reduce your rate and offer you better terms on already existing credit cards.

What can you do then? Try to transfer your credit card balance.

What’s a balance transfer?

A balance transfer is when a credit card holder transfers his balance to another credit card.

And if the new credit card offers a lower interest rate – bingo!

Keep in mind:

The amount of debt you can consolidate cannot exceed the new card’s credit limit. So if you have $7000 balance on the old card and the new one’s credit limit is $5500, you can transfer only $5500.

Usually, the new credit card offers an attractive introductory rate (it could be zero in some cases) which has its period; when it ends, you have to start paying a “normal” interest rate again. There are many good offers on the market so we recommend you compare the best options. Be aware also of different fees, such as balance transfer and annual fees.

Read More: The Best Methods to Consolidate Debt

Final words

Having your credit card’s rate reduced is a great way to save some cash and invest in something else. The key to achieving this goal in the first place is to maintain an impeccable credit score.

This can lead to an interest rate reduction and better terms in general without even asking for it. If this does not happen, contact your bank and negotiate the terms.

Remember: most of the people manage to renegotiate the terms on their existing credit cards. If this doesn’t work, you can choose to make a balance transfer.