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How to Lower Credit Card Rates

Susan Weber
You can lower your credit interest rates.

Knowing how to lower credit card rates can stop you from paying too much for your credit card. A little homework on your part and a call to your credit card issuer may be all that's needed for you to reduce the rate you are paying.

You Can Get a Lower Interest Rate

The average credit card rate is 14 percent, according to Dave Ramsey, a financial author, radio show host and frequent contributor to CBS's Good Morning America. He suggests that cardholders ask for a lower interest rate on their credit card if they are paying over 10 percent.

You have a very good chance of getting a lower rate if you call your card issuer and you know how to lower credit card rates. According to the BCS Alliance, a consumer advocacy group, 57 percent of cardholders studied were able to get interest rate reductions of 7 to 10 percentage points by just calling their card issuer and asking for a lower interest rate.

Your chances to get a lower rate improve if you:

  • Are a long time customer
  • Have a good credit rating
  • Pay more than the minimum payment required each month
  • Have an excellent payment record with your card issuer

A lower rate is possible even if you don't a perfect credit history. Your rate may be lowered ten percent, even if you have missed payment due dates and are currently paying a default rate as high as 30 percent.

The credit card industry is very competitive and it costs a lot to get a new customer. At any given time, there are always cards available with a significantly lower interest rate than your current rate. If your card issuer won't give you a lower interest rate, they know that you can always close your account and transfer your balance to a competitor's credit card.

How to Lower Credit Card Rates

Step 1 - Do Your Homework

Gather some information before you pick up the phone to call your card issuer. The more information you have, the better your chances of getting your rate reduced.

  • Know what you are paying - Look through all your credit cards and check the interest rates on each card. Be sure to double check if the rate is a promotion-only rate. If so, call to see when the promotional rate expires and how much the interest rate will increase after the promotion ends.
  • Know the rates of other credit cards - Check other the credit card offers or go online and check the interest rates of other credit cards. LoveToKnow Credit Cards has several articles describing the types of low interest rate cards that are available. See the "Cards with Low Rates" box for other articles.

Additional sites for online research are:

Step 2 - Decide What Rate You Want

Review your research. Look at the range of interest rates on your current cards. You should try to get all of your cards down to, or below, the rate of your lowest rate card.

Step 3 - Determine You Reasons

Make a list of the reasons why they should lower your rate. Some possibilities are:

  • The rate is higher than the rate you are paying on your other credit cards.
  • The rate is significantly higher than rates on other credit cards.
  • You have been a cardholder for a long time.
  • You have a good payment history with the card issuer.

Step 4 - Call and Ask For a Lower Rate

Once you have your research results, call your credit card issuer at the 800 number on the back of your credit card.Start your call with the customer service rep. Follow the tips in the box below.

When You Call Your Credit Card Issuer
  • You should know:
    • Rates you are paying on your other credit cards
    • Rates available on other credit cards
    • Rates you are being offered
    • Your credit score
  • Tell the rep that you:
    • Are a good customer ("I have had your card for five years." or "I have never been late with a payment.")
    • Have found or have been offered a lower rate
    • Want a lower rate on your card
    • Will transfer your balances to a lower rate card or cancel your card if you don't receive a lower rate

The rep may immediately agree to change your interest rate or transfer you to another rep that has the authority to reduce rates. You should be firm in your request for a lower rate. If they ask you how much of a rate reduction you want, ask for a 10 percent reduction.

If you are not getting the rate you want, consider these options:

  • If they won't offer you a permanent rate reduction, ask for a lower rate for six months.
  • If they are concerned about a late payment, offer to set up an automated payment plan from your checking account.
  • Consider changing to a new card from the same card issuer. They may be willing to give you a lower rate on a card that does not have rebates, points or discount programs.
  • If you have a student credit card, consider closing your student account and getting an additional card on your parent's account. It may cost you $20 for an additional card. You will need to share the credit line, so your parents may want to call for a credit line increase.

Step 5 - Don't Give Up

If you cannot receive a lower rate, you have several options:

  • Call the card issuer back in about an hour. You will be talking to different people, and they may be willing to lower your credit card rate.
  • Open a new, lower-rate account from another card issuer and move the balances from the higher rate card over to the new lower-rate card. Once the lower rate card is paid off, put the card away and don't use it. Keeping the account open after pay off will increase your credit score.
  • Transfer all or part of the balance to an existing, lower-rate credit card.
  • Keep calling your card issuer every month asking for a lower rate until you receive what you want.
How to Lower Credit Card Rates