Is It Possible to Lower Your Credit Card Interest Rate?

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  • Credit cards often have very high interest rates.
  • You may be able to reduce your interest rate with a balance transfer credit card or debt consolidation loan.

You may be surprised at the answer.

Credit cards are known for having high interest rates, which makes repaying debt more expensive if you carry a balance and have to pay financing charges. If you currently have a balance on your card and are sending a fortune in monthly interest costs to creditors, it's worth exploring your options for lowering your rate.

Surprisingly, there could be several solutions to making your debt payoff cheaper, depending on your situation. Here are a few strategies you may be able to use to drop your rate.

Take advantage of a balance transfer offer

One of the simplest solutions to reducing your credit card's interest rate is to take advantage of a balance transfer offer.

Balance transfer credit cards provide customers with 0% introductory rates on transferred balances for a period of time. For example, you may qualify for a 0% rate for 12 months if you transfer a balance.

To get one of these deals, you may need to open a new balance transfer card -- or a card you already have may provide a 0% rate as a special offer. There will likely also be an upfront cost, such as a fee equaling 3% of the amount of the transferred balance. Still, if you are paying a high rate on your current card and can drop that to 0%, it's often worth it -- especially if you think you can repay the transferred balance before the 0% rate expires.

Consider a debt refinancing loan

You can also look into a debt consolidation or debt refinance loan. This would involve taking out a new loan, such as a personal loan, that you use to repay your credit card debt.

Personal loans often have much lower interest rates than credit cards do, so using the proceeds from a personal loan to pay off your cards would mean converting your high-interest debt to low-interest debt that's much cheaper and easier to pay back.

Personal loans also have fixed repayment timelines, unlike credit cards, so it's easier to estimate both your total costs and your debt-free date.

Ask your creditors to lower your rate

In some situations, it may be possible to negotiate your interest rate with your current card issuer. This is sometimes the simplest approach, especially if you don't want to apply for new debt and if you want to keep charging on the card you have.

If you want to try this approach, you can do it by calling your card issuer and asking if they'd be willing to work with you to drop the rate. They are more likely to do so if you've been a good customer, and especially if you've had the card open for a long time.

You can also provide insight into why you're asking for a lower rate. This might be because your credit score has recently increased and you think you should be charged less to borrow. Or it could be because you're experiencing a period of financial hardship and are worried about being able to make payments at your current rate.

You may not have success the first time with this approach, but if you are turned down, you can always try calling again and asking someone else. You could also consider asking for a temporary rate reduction if your card issuer says no to a permanent one. This would give you time to repay what you owe while keeping financing charges to a minimum.

Ultimately, the right option will depend on your situation and your card issuer's willingness to work with you. But the good news is that all three of these approaches could be viable solutions to reducing your interest rate under the right circumstances -- and it's worth considering them to make debt repayment more affordable going forward.

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