The Best Strategies for Lowering Your Credit Card Interest Rate

If you carry a balance on your credit card, you're paying interest charges. First things first: Figure out how to avoid being charged that interest in the first place. Otherwise, the easiest way to reduce your credit card interest payments is surprisingly simple: just ask. Many cardholders overlook this straightforward approach, potentially leaving money on the table. Here's how to go about lowering your interest rate, so you have a better shot of getting on top of your credit card debt.

Evaluate your current situation

Before making any moves, it's important to understand your current financial position. Start by reviewing your credit score and payment history, as these factors significantly influence your negotiating power. Next, compare your current interest rate to what's available in the market for similar credit profiles. This research will give you a realistic idea of what you might qualify for. Finally, calculate how much you could potentially save with a lower rate. This figure will not only motivate you but also provide a concrete goal for your negotiations.

Prepare before calling

Preparation is key to any successful negotiation. Begin by gathering information on competitor offers, especially those you've recently received in the mail or online. These can serve as leverage during your conversation. Make a mental note of your positive account history, including how long you've been a customer and your record of on-time payments. Be ready to discuss your loyalty as a customer, highlighting any other accounts or services you have with the same institution.

Making the call

When you're ready to negotiate, contact your card issuer's customer service line. Ask to speak with a representative specifically about lowering your interest rate. Remember to be polite but firm in your request. Your demeanor can significantly impact the outcome of the conversation. Approach the call with confidence, knowing you've done your homework and have a strong case for a rate reduction.

What to say on the phone

During the conversation, focus on highlighting your good payment history and loyalty to the company. Mention any better offers you've received from competitors, using them as a point of comparison. Be specific about the rate you're seeking, based on your research of current market offers. Remember, the representative may not agree to your first request, so be prepared to negotiate.

If they don't agree

If the representative doesn't agree to lower your rate, don't give up. Ask to speak with a supervisor who may have more authority to adjust rates. Inquire about temporary promotional rates that could provide short-term relief. If all else fails, consider a balance transfer to a card with a lower rate, but be sure to factor in any balance transfer fees when calculating potential savings. Remember, even if you don't succeed on your first attempt, you can always try again in a few months, especially if your credit score improves or your financial situation changes.

How much you can save

There are no guarantees your credit card company will approve a decreased interest rate, but the potential savings make it worth trying. According to LendingTree, the average reduction that people receive is 6.3 percentage points. Not only that, but more than three in every four cardholders who asked for a lower interest rate on one of their credit cards got one, according to that same 2023 survey.

Depending on your circumstances, that type of decrease could save you $500 or more in interest. Let's say a cardholder has $5,000 credit card balance and pays $250 per month.

• A 6.3-percentage point reduction from 23.84% to 17.54% saves $478 and two months worth of payments. That adds up to $1,436 over 26 months (versus $958 over 24 months).

• A 6.3-percentage-point reduction from 27.00% to 20.70% saves $532 and two months worth of payments. That adds up to $1,717 over 26 months (versus $1,185 over 24 months).