How to negotiate a lower interest rate on your credit card
Lowering your interest rate can be as simple as calling and asking, but often it involves some negotiation. There are some steps you should follow to make sure you're prepared.
Know your numbers
Before contacting your credit card company, do your homework. Understand how credit card interest works, and make sure you have the following information on hand.
- Current interest rate
- Interest rates on competing cards
- Credit score
- Credit card balance
You can find your credit card interest rate on your monthly statement, and you can use the interest rate on other credit cards as leverage for negotiation. A recent study on waiving credit card interest shows that the average interest rate for cardholders with a balance is 16.61%, although the interest rate you qualify for is highly dependent on your credit history. If you've received any credit card offers in the mail recently, take a look at those interest rates.
In addition to knowing your credit score, you might want to look back through your payment history to see if you've ever missed a payment. If you have good credit and a history of on-time payments, you'll have a better chance of getting what you want.
It can also help to know how much you can afford to pay toward your balance each month, in case you're offered a payment plan in exchange for a lower interest rate.
Call your credit card company and ask
Once you have all your information ready, call the number on the back of your credit card and ask for a lower rate. Ultimately, credit card issuers are often willing to negotiate if it means keeping you as a customer, so use this to your benefit.
Let them know your current rate is too high and you're thinking about transferring your balance to get a lower rate. If you've received other offers, now is the time to mention those. Say you're willing to keep your balance with them if they decrease the interest rate. If you've never missed a payment, make sure to bring this up.
If you want to be even more resolute in your negotiations, you can tell them that you plan to close the account if you can't get a lower interest rate, but you should be willing to really do so if your creditor doesn't budge. Keep in mind that closing accounts can negatively impact your credit score.
If you're denied, try again
Receiving a denial from one customer service representative isn't necessarily the final word. It's worth calling again later and speaking to someone else who might make a different decision. If you've got multiple credit cards, try this with each one. You'll probably have the best luck with issuers you have a longstanding positive relationship with.
If you've tried a few times and still haven't had any luck, you can ask for a temporary decrease in your interest rate. Credit cards often have promotional offers that come with a lower interest rate for six or 12 months.
Finally, if you can't manage to get a lower rate on any of your cards, it might be time to throw in the towel for now, work on improving your credit score, then try again in a few months with your increased score.
Improve your credit score and try again
Improving your credit score takes time, but there are steps you can take to move toward good credit faster. One of the best ways to increase your credit score quickly is to pay off credit card balances, so focus on putting as much as possible toward your credit card balances each month.
After six months or so of on-time payments, you might see some results, particularly if your balance has decreased drastically. Once your score has gone up, give your credit card company a call, reference the diligent work you've been doing to pay down your balance over the last few months, and ask for a lower interest rate.
Other options for getting a lower credit card interest rate
If you've still haven't been able to decrease your credit card interest rate, or if your interest rate went down but you're still struggling to make your monthly payments, there are other options for securing a lower interest rate.
Low-interest credit card
Certain credit cards simply have higher interest rates than others. If you have good or excellent credit and your credit card interest rate is still in the mid- or high-teens, it's worth looking into some of the best low-interest credit cards.
Credit cards from credit unions often have some of the lowest interest rates and most favorable terms. This might not help you out if you're currently paying off high-interest debt, but it doesn't hurt to have a low-interest credit card on hand in case of emergency.
