- 1 How to Get a Lower Interest Rate on Your Credit Cards
- 2 What Can I Do To Lower My Credit Card Interest Rate
- 3 6 steps to reducing your credit card interest rates
How to Get a Lower Interest Rate on Your Credit Cards
Getting a lower interest rate on your credit card is something you can do with just one phone call. We’ve all been there. You get sucked in by those low 0% introductory rates, build up a huge credit card balance, then get hit hard with interest rates as high as 28% once the low intro rate has ended. But did you know that you can negotiate a lower interest rate on your credit card balance just by making a simple phone call?
Yep, you can get a lower interest rate just by asking!
Remember, it’s us against them when it comes to “what’s in your wallet”, and the more cash you’re able to keep or pay down your debt with is a win for you, not the bank, who doesn’t care about you at all.
Of course, I don’t like the idea of using credit cards at all. So once you negotiate a lower interest rate, my advice is to pay off your credit card balance as quickly as you can and cut up your credit card for good!
It’s relatively simple with just one phone call, as long as you know what to do. Here’s how to negotiate a lower interest rate in just a few simple steps:
- Place a call to the customer service number for your card.
- Tell them you want a lower interest rate and your annual fee (if you have one) eliminated.
- If they ask why, tell them it will better help you meet your financial obligation to them without any problems.
- Also tell them that you’ve been looking at other cards with no annual fee and lower interest rates. Let them know you’ll float your balance over to one of those cards if they can’t help you out.
- If they still refuse to negotiate, ask if there is anyone else you can talk to that can help. Sometimes the person that initially answers the phone may not have the power to lower your rate, but someone higher up can do it with no problem.
- If they refuse to help, don’t hesitate to transfer your balance away from that company to another card with a lower interest rate and no annual fee.
When you make that call, don’t take no for an answer. Sometimes they just want to see how far you’ll go, because if you are easily discouraged by their “no”, then it saves them money. Be pleasant, but be firm. Don’t talk from a position of weakness.
For example: If you say “I was wondering if maybe you could give me a lower interest rate?”, that is probably not going to work.
Speak from a position of strength: “I want you to give me a lower interest rate and eliminate the annual fee on my credit card. If you can’t do that, I’ll be floating my balance to another credit card with a lower interest rate.” If you sound passive and unconfident, they will roll right over you.
You might want to practice the call beforehand, rehearsing what you’ll say and how you’ll say it. Of course, this technique may not work every single time, depending on your payment history and other factors.
But if you’re firm and insist upon getting what you called for, you’ll find that negotiating your rate works quite often. You should understand this phone call might be a long one. They will likely put you on hold multiple times and even try to sell you alternate products.
Do your best to be patient. Continue to nicely insist on getting what you came for, and you’ll find that lowering your interest rates with this technique works more often than not.
This call will last 30 minutes to an hour, but it can literally save you hundreds or even thousands of dollars in interest depending on your balance.
Once you get a lower rate, don’t get lazy! Your interest rate can shoot back up in short order if you’re not careful. Here’s what you need to do:
- Pay your balance on time- Sending your payment late is a huge red flag for the credit card company. A single late payment will send your interest rate through the roof.
- Watch your credit limit- The closer you get to your credit limit, the more likely your rate will go up.
- Don’t pile up more debt- Just because you got a better interest rate doesn’t mean you should spend more money. Be careful!
Sure, there are plenty of credit cards that will offer you a 0% interest rate. That’s not what I’m talking about here.
The best 0% interest rate is the one you get by not having credit cards at all! Yeah, I know that sounds kind of crazy to some people. But what have credit card companies done for you lately? Seriously, you probably wouldn’t be reading this post if you were perfectly happy with your relationship with credit cards.
The best thing you can do is pay those credit cards off for good and transition to a cash only lifestyle. Angie and I have been doing it for a dozen years now, and I can tell you there is no better way to live your financial life.
We haven’t stressed out or fought about credit card debt in many years. It’s brought more peace to our marriage and our finances, and that’s worth its weight in gold!
Once you call your credit card company and use this technique, contact me by email and let me know how it went for you. I’d love to hear your experience!
Question: Have you used any special techniques to get your debt lowered or paid off quicker? Leave a comment and tell me about it.
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Great article. I believe everyone should give this a try.
In the past (about 15 years ago or so) I had a little success in doing this. The sense of empowerment to take charge of my finances spurred on the feeling that I finally controlled my money & not it controlling me.
More recently, I made the mistake of putting medical bills onto credit cards. When the dust settled from the illnesses & injuries, I realized what a poor decision that was. So, I reached out to ask for a reduction. I was turned away by all saying I was not eligible at this time. It wasn’t until the last “no” that I thought to ask why. They said it is no longer permitted for the credit card companies to do rate reductions as a courtesy & that they are required by the regulations with which they must comply to set the rates based on credit worthiness. I have never been able to get confirmation as to whether or not this is true. Has anyone else heard of this? Could clarify if it is true or not? Thanks!
It varies within each credit card company. In general though, there have been so many people over the past few years with credit card problems that they will only work with you if they see signs that they may not get paid. They are usually more willing to work with you once you miss a few payments and they realize they might have to send you to a collection agency. The worse your situation, the more likely they are to give a little consideration.
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Years ago I tried this tactic with Discover. I went for the firmly passive approach. I called them up and commanded, “I need you to lower my interest rate immediately.” The lady on the other end literally laughed out loud at me and thought I was joking. Needless to say, I was not firm and my attempt failed.
Well, obviously it doesn’t work every time, but when they say no, you always have the option of floating the balance to a lower rate card with a different company to get it paid off quicker. They won’t be laughing then!
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(From Bob: I was excited when Jay sent me this article about reducing credit card interest rates, because there are way too many Christians who are giving all their money to credit card companies instead of into the Kingdom! I wrote a similar article a while back as well – how to negotiate with credit card companies.)
Credit Card Debt can Destroy Your Wealth Potential
Have you ever heard the saying “I’m so poor, I can’t even pay attention”? It is so true with credit cards. Most people do not pay attention to the fine print. The biggest financial mistakes that I see on a day-to-day basis mainly deal with credit card issues. It is not so much the balance that is the problem, it is the interest. This is the biggest wealth-killer. If you have even a $10,000 balance at 19.99 percent, this is almost $2,000 a year in interest. That is $2,000 that could have been donated or invested. This adds up over time, especially when you are making only the minimum required payments.
You will make very little progress if you are just sending that minimum payment each month. This is where the credit card companies make most of their profit. If you owe $10,000 and make the minimum payments, you will often pay two to three or more times the principal amount in interest. That’s right, over the life of that debt, you’ll pay $10,000 or $20,000 or more to service that debt. So a $10,000 purchase may in reality end up costing you $20,000 or $30,000. Credit card companies make money by killing you with late fees, high interest payments, and confusing small print. Don’t be a victim of their game; get out of debt. You can’t achieve true wealth carrying credit card debt.
In order to make headway in paying off your credit card debt, you need an aggressive course of action. This requires lowering your interest payments, paying off the smallest balances first, and paying more than the required monthly payments. In order to get the monkey off your back, you have to first be prepared to fight back. In this war for your wealth, pacifism leads to poverty.
You can lower your credit card interest by following a simple method:
Step 1: Find out your current interest rates on your credit cards.
Step 2: Shop around and find what competing cards are charging for interest.
Step 3: Call your credit card companies and ask to speak to a supervisor or manager. Use competitor rates to negotiate your rate down. Keep escalating your request up to the next manager if you do not get the answer you are looking for from the first manager you talk to. Be persistent. Don’t back down.
Step 4: While you are at it, negotiate to have your late fees reversed. This is also negotiable. Be prepared to fight back.
Step 5: Set up your future payments to that company to be made automatically. Either use a bill-payment company or have your monthly payments scheduled to automatically hit before their respective due dates.
Step 6: Continue making the largest monthly payment you can make—above the minimum payment.
Jane came to see me a few years ago. She didn’t think she could ever get out of debt. She and I sat down and figured out that at her current pace, it would take her twenty-eight and a half years to pay off her debt. Her interest rates were between 19 percent and 27 percent. She followed the action plan listed above and negotiated her rates down to 7–12 percent. She paid off the smallest balances first and kept allocating money toward debt repayment.
Within three years, Jane had paid off all her balances. She saved more than twenty-five years of payments and nearly $100,000 in interest charges. She is now able to take the money she was paying the credit card companies and give more to her church and save more for her future. Jane got the credit card monkey off her back.