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How to Lower Your Credit Card Interest Rate

Jackie Lam • May 29, 2024

A customer uses tap-to-pay technology to pay for their purchase with their credit card.

Imagine this: You’re climbing a mountain that seems to get steeper the more you climb, and no matter how hard you try, you can’t seem to take a breather.

It might feel similar to be burdened with high credit card interest rates. As you make your payments each month, it may feel like you’re barely making a dent in your balance.

Requesting a lower credit card APR card interest rate could mean a gentler climb up the mountain, making your journey toward financial freedom less daunting. Here’s how you can negotiate to potentially lower your credit card interest rate.

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The benefits of a lower interest rate

High-interest credit card debt is a reality for many. The average credit card debt hovers at $6,501.¹ All-time-high credit card interest rates – an average of 22.8% – aren’t helping.²

Reducing your credit card interest rate can lift the weight off your shoulders. It can allow you to:

  • Reduce the cost of debt. Lower rates mean less money spent on interest, reducing the total cost of your debt over time.
  • Pay off your balance faster. With lower interest charges, more of your payment goes towards the principal balance.
  • Improve financial stability. Less burden from debt can lead to better credit scores and improved financial fitness. Plus, you can potentially put more funds toward your savings and meaningful money goals.
  • Lower stress. Has stress about your finances led to sleepless nights? A lower debt load can also decrease money-related anxiety.

What to look for in a credit card interest rate

When shopping around for a credit card, the interest rate is a key element, but figuring out what exactly is a “good” rate can be confusing. For the most part, credit card interest rates are determined based on the “prime rate,” plus a margin that the lender adds based on your risk level.

The prime rate is an interest rate that’s set by banks. While the Federal Reserve doesn’t have any direct involvement in setting the prime rate, banks do decide to set the prime rate partly on the rate that banks charge one another for short-term loans (aka the federal funds rate).

Here’s what to consider:

  • Average rates. Right now the national APR is 22.8%.² This is double what it was 10 years ago.³ The interest rate you may be offered is based on your creditworthiness and the card type. Your creditworthiness is another way of saying how likely you’ll stay on top of your debt payments.
  • APR vs. interest rate. There’s a difference between APRs versus interest rates. The APR, which stands for Annual Percentage Rate, is the interest rate combined with fees.
  • Shop around. It’s always helpful to compare rates from multiple credit card issuers. Even a few percentage points can make a considerable difference in your interest rate.

How to ask for a lower credit card interest rate

A high interest rate on your credit card means the interest you owe on your existing balance can grow quickly due to compound interest working against you.

Reducing your credit card interest rate is possible and can lead to significant savings over time. Although it can feel intimidating, taking it step-by-step can help you feel more confident.

Here is how you can have this conversation with your credit card company to lower your credit card interest rate:

1. Review your finances

First, take a bird’s-eye view of your finances. Take a look at your:

  • Current debt. This includes your credit cards, student loans, car loans, and personal loans. Check your balances, APR, payment due date, and the grace period.
  • Take-home pay. Knowing how much cash you bring in on average in a given month can help your credit card issuer understand your situation.
  • Expenses. Factor in your ongoing, monthly expenses as well as the one-off and annual expenses. If it’s been a minute since you last reviewed your budget and made tweaks, now is a good time to do so.
  • Past payment history. If you have a positive track record of making on-time payments, you can use this as leverage to persuade your credit card issuer to lower your interest.

2. Check your credit score

Besides being aware of your financial situation, another step in figuring out how to lower your credit card interest rate is to check your credit scores. This will help you gauge whether you need to improve your score before negotiating with your card issuers.

There are several ways to check your credit. You can order a free credit report from AnnualCreditReport.com from each of the three credit bureaus.

You can also check your score by logging into the Chime app and tracking your credit scores for free.

When you look over your credit report, look for any incorrect information. Inaccuracies can lower your score. For example, payments that are incorrectly reported late and accounts that are reported as delinquent that aren’t yours.

If you spot something wrong, you can file a dispute with each of the three credit bureaus. When you file a dispute, the credit bureau has 30 days to review your dispute.

3. Improve your credit score if needed

If your credit score can be improved, a better credit score could strengthen your case. To rebuild your credit score:

  • Make timely payments
  • Catch up on overdue bills
  • Reduce your credit utilization – aim to keep it under 30%
  • Only apply for credit you need
  • Become an authorized user on someone else’s card
  • Use credit cards when necessary
  • Use only one credit card and put a freeze on the others

4. Search for credit card offers with competitive rates

If you’re aware of what similar credit cards offer regarding rates, you can use that to negotiate a lower APR.

Consider getting prequalified for comparable credit cards with similar perks. When you get prequalified, card issuers will do a soft pull on your credit, which won’t impact your credit.

Credit card companies want to keep you as a customer. Do your homework so you can go to them and point out any comparable cards that offer lower interest rates. Tell them you’re considering moving to a different card. The card issuer might be more open to lowering your interest rate.

5. Call and submit your request

Once you’ve gathered the necessary information and your credit is in a solid place to put you in the most favorable position possible, call your credit card issuer and request a lower credit card APR.

Be direct yet polite. First, show the value you bring as a cardholder. Point out that you’ve been a long-standing customer and have a history of on-time payments.

It can also help sway the card issuer by pointing out how lowering your interest rate can benefit both parties. Express your desire for a more manageable rate and how lowering your interest rate can help you stay a loyal customer.

6. Be open to negotiating again down the line

If you get a “no” at first, don’t take it as the final answer. Your financial situation or the credit market might change in the near future, and so might your chances.

Wait a few months, then check to see if any comparable credit cards emerge. Stay afloat of news in the credit card industry. Credit card delinquencies recently surged to more than 50%.³ If this trend continues, your credit card issuer might be more open to lowering your credit card interest rate to keep you as a customer.

Lower interest rates, less financial stress

Successfully figuring out how to lower your credit card interest rate can benefit you in more ways than one. It can help you save on credit card interest fees, dig out of a debt hole sooner, and alleviate financial stress.

Doing your homework, approaching the negotiation with the proper information, and taking steps to ensure your credit is strong can help you find the best strategy. Credit card issuers might be more open to giving you a lower interest rate.

Want to lower your debt even more? Find out the best ways to pay off credit card debt.

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¹ Information from Experian's "Average Credit Card Debt Increases 10% to $6,501" as of May 13, 2024: https://www.experian.com/blogs/ask-experian/state-of-credit-cards/

² Information from Consumer Finance's "Credit Card Interest Margins at an All-Time High" as of May 13, 2024: https://www.consumerfinance.gov/about-us/blog/credit-card-interest-rate-margins-at-all-time-high/

³ Information from CNBC's "Card Card Delinquencies Surged in 2023, Indicating 'Financial Stress,' New York Fed Says" as of May 13, 2024: https://www.cnbc.com/2024/02/06/credit-card-delinquencies-surged-in-2023-indicating-financial-stress-new-york-fed-says.html

⁴ Information from FTC's "Disputing Errors on Your Credit Report" as of May 17, 2024: https://consumer.ftc.gov/articles/disputing-errors-your-credit-reports

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