How to Lower Your Credit Card Interest Rate

It might be as simple as popping the question. But be ready to negotiate.

Getting your credit card interest waived could save you an average of $88 a month, according to a recent credit card study by The Ascent. While getting your interest waived is only an option with some credit card issuers due to the novel coronavirus pandemic, you can always try to lower your credit card interest rate. Here's how.

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.

Balance transfer

Balance transfers are one of the best tools for paying off debt quickly and saving money on interest.

The best balance transfer credit cards typically offer a 0% intro APR on balance transfers for a limited period, usually from 12 to 18 months. As long as you can pay off the balance before the introductory period ends, this option might even beat negotiating a better rate on your current card. Keep in mind that you'll need good credit to qualify for most balance transfer credit cards.
Here are some of our experts' top-rated balance transfer cards. For the full list, head to our Best Balance Transfer Cards page.

Debt consolidation loan

A debt consolidation loan can help you gather all your debt into one monthly payment, and pay it off at a lower interest rate.

Even if you don't qualify for a lower rate, paying off your credit card debt with a debt consolidation loan can help you lower your monthly payment amount. That said, lowering your monthly payment amount also draws out your repayment period, and that usually means you end up paying more in interest over the life of the loan. If you can currently afford your monthly payments, it's often best to stick with them.

Credit card hardship payment plan

If you've tried negotiating a lower rate and considered all of your options, and you still can't afford your credit card payments, you might want to look into whether your credit card issuer offers a hardship program.

These are payment plans that you work out with your creditor. In exchange for your commitment to a payment plan, the creditor will often offer a temporary lower interest rate to help you afford your monthly payments. You'll have to qualify for the program, and that might require proof that you've experienced some form of economic hardship recently, such as job or income loss or an emergency.

Make sure you understand the terms of any payment plan fully before agreeing to it. These plans might involve actions such as closing your account or lowering your credit limit, and that can impact your credit. You should also be certain you can afford the monthly payments before signing on.

Bankruptcy

It can take years to recover from bankruptcy. It should be treated as a last resort, and only considered if you've exhausted all other options and still can't afford to make payments on your debt.

That said, it's also an opportunity for a second chance, financially speaking. Having a bankruptcy on your credit history can impact your ability to get a car, rent a home, and even get a job, but it doesn't stay on your credit forever. With financial diligence, your credit should start to improve after a few years, and the bankruptcy will fall off your credit report completely after seven to 10 years.

There's no shortage of ways to secure a lower interest rate on your credit card. Whether you're paying off debt or just looking to get a better deal, securing a better interest rate is one of the easiest ways to save money.

Still have questions?

Here are some other questions we've answered:

• What Is a Good APR for a Credit Card?
• What Is a Good Credit Limit?
• How to Dispute a Credit Card Charge