How to Get Lower Interest Rates on Your Credit Cards

In case you are concerned about a high-interest rate on your credit card eating into your savings, you should know that it is not a number that is set in stone.

Variable interest rates are common on most credit cards, which means they can fluctuate depending on a number of factors, including the discretion of the card issuer.

It may be possible to negotiate a lower interest rate on your credit card by contacting your credit card issuer, especially the issuer of the account you have held the longest, and requesting a reduction.

It is not guaranteed that the issuer will accept your application, but you are more likely to have success if you have made on-time payments in the past and your credit score is strong or has recently increased.

Sharing personal circumstances like unemployment or other financial difficulties can also help you make your case.

Here’s how to plan for and effectively negotiate a lower credit card interest rate.

Start with the card you’ve had longest

The best thing you can do if you have more than one credit card is to ask the issuer for a lower interest rate on each of those cards.

However, give preference to the issuer with whom you have had your card the longest. It is especially advantageous if you have consistently paid your credit card bill by the due date since that track record should give you a certain degree of leverage.

Tell the issuer why you would like your rate reduced. Perhaps you have lost your job, had your salary cut, or had to pay unexpected medical expenses.

The possibility arises that you have recently worked on building your credit, and you would like to now focus on paying off your debt. Maybe you have received an offer in the mail or online for a credit card with a lower rate than what you currently have.

Ask the issuer whether they will consider reducing your interest rate as a way to reward your loyalty and reliability since you have made on-time payments for several years.

A second option would be to contact the issuer of the credit card with the highest interest rate.

A drop in that card’s rate will reduce the amount of interest you pay by the biggest margin. But if you haven’t had the card for too long, you won’t be able to use your customer loyalty to your advantage.

Ask for a break if necessary

For example, ask for a one-year rate reduction of 1 to 3 percentage points if your credit score has recently improved.

It is important to mention if your credit score has recently increased, which can demonstrate your ability to make payments on time.

You may also request a temporary break for as long as you need in order to recover from financial difficulties.

Try again

Maintain detailed notes of all your phone calls. If you are unable to lower your current interest rate, even for a short period of time, call again within three to six months.

Don’t hesitate to ask again, especially if you have been paying your bills on time. In addition, you should mention any new lower-rate credit card offers that you may have received from other issuers in the interim.

In case the issuer does not agree to your request, you may threaten to cancel your credit card.

However, you should be aware that doing so may adversely affect your credit scores. Canceling a credit card reduces your available credit, resulting in a higher proportion of it being used if you have outstanding debt on other cards.

A higher credit utilization rate can hurt your credit scores.