How to Lower Your Credit Card Rates

Guide Note: Lowering the interest rates on your credit cards means you'll pay less over time for any balances you carry over month to month. If you had $1000 in debt, for example, and lowered your interest rate from 16% to 11%, you'd save a total of about $300 over the life of the loan assuming minimum monthly payments. (You'd also pay off your debt a year faster.) How to Lower Your Credit Card Rates will help you convince your credit card company to lower your rate, leading you to significant savings.

Table of Contents:

Introduction

(Creative commons photo by Cheon Fong Liew)
(Creative commons photo by Cheon Fong Liew)
  • The average annual percentage rate on American credit cards is about 18%. Convincing your credit card company to lower your rates will not only reduce your interest payments each month, but will reduce your overall debt. And because the average consumer is regularly inundated with new credit card offers, you have more control over your rates than you might think. Lowering your credit card rates is possible even if you have little confidence as a negotiator. You'll simply need to do some research and make a few phone calls.

Step 1: How Much Are You Paying Now?

  • Do you know what your current interest rates are on the credit cards you carry?
  1. Make a table or spreadsheet detailing exactly what your interest rates are for each card.
  2. Organize them from highest interest rate to lowest.
  3. Also determine what your balances are on each of these cards.


Step 2: Do a Little Research

  • Knowing the average rates will help you bargain with your credit card companies.
  1. Experts advise looking at Cardweb.com and CNNMoney.com's card search tool to see which companies are currently offering the lowest rates.
  2. You might have also received a credit card offer through the mail that offers a low rate and for which you have been pre-approved.
  3. Also know what kind of customer you have been. Have you paid your bills on time, all the time? Have you been a customer for a long time? If you have been a good customer, you are at a greater advantage when negotiating with your credit card company.
  4. Anyone with a credit score above 750 should qualify for a credit card interest rate of 10% or less.

NOTE: You don't have to go so far as applying to one of the credit cards you've found; you can assume that the competitive rates you've discovered are possible to obtain for most new customers.

Step 3: Pick Up the Phone

Get dialing! (Creative commons photo by Alexander O'Neill)
Get dialing! (Creative commons photo by Alexander O'Neill)
  • You'll need to speak with your credit card company and request a lower rate over the phone.
  1. First, make yourself a script.
  2. Oprah's Debt Diet provides an easy script you can follow.
  3. Your discussion points should include:
      • What your current rate is.
      • Lower rate offers that you've discovered in your research.
      • Can your current card issuer match that offer or do better?
  4. If you have multiple credit cards, and one has a particularly lower rate than the others, you can also threaten simply to transfer your balances from higher rate cards.
  5. Call the customer service phone number printed on the back of your credit card, or find the correct phone number on your card's website.
  6. Be polite, but firm. You need to convince this customer service agent that you are serious about taking your business elsewhere.

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Step 4: Speak with a Supervisor

  • If you don't get anywhere with the customer agent you speak with, it's time to move on.
  1. If you reach a dead end with your customer service representative, politely ask to speak with a supervisor.
  2. A supervisor may have greater authority to lower your rates and might be more attuned to the risks of losing a customer.
  3. Repeat your script with the supervisor, making sure to mention the specifics of the other offer(s) you are contemplating.
  4. Reason with the supervisor. If he/she is not budging, use common sense. Saying something like, "Look, we both know it's more cost effective for you to keep me as a customer as opposed to recruiting someone new. I'd rather stay with this company, but it's just not worth it at my current rate."
  5. If he/she still won't lower your rates, call back in a month.
  6. If persistent requests still fail, you should exercise one of the better offers you've found.

Step 5: Consider the Alternatives

  • If you still aren't getting the rates you want, it might be time to switch cards.
  1. Many credit card companies offer low introductory rates to entice new customers.
  2. Since you've already done the research on the deals available, you should be able to find a card with a favorable interest rate quickly. Go back to CNN Money's card search tool if you need to compare opportunities.
  3. Be sure to check all the fine print regarding balance transfers. If fees are reasonable, and your low introductory rate isn't going to skyrocket in a mere few months, it's the right move to switch cards.

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