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Feeling overwhelmed by the sky-high interest rate on your credit card? You may not be stuck with that rate forever.
Credit cards are great tools that can help you leverage your cash flow, since you can make purchases now and pay later. Cards can stretch your dollar a little further, too, if you take advantage of rewards or cash back cards.
But credit cards are also known for coming with high interest rates that make carrying balances expensive for cardholders. As of 2017, travel and other rewards cards have average interest rates around 15.99%, while cash back credit cards run an average APR of 20.90%.
If you currently carry a balance on your card and want to avoid incurring more debt, lowering the interest rate on your card can help. But how do you lower your credit card interest rate without switching cards?
You can negotiate with your bank or credit card company to get a lower interest rate on your card. Although the card company may ultimately say “no,” knowing these steps could help improve your chances of getting a favorable response.
How to negotiate a lower credit card interest rate
1. Evaluate your current situation
Before you call the customer service number on the back of your credit card, understand what you’re working with. Know your current credit card terms, including the grace period, statement due date and your current balance.
By coming prepared, you’re setting yourself up to do a better job of evaluating the options your credit card company might offer.
Don’t forget to check your credit, as well. You can use this as leverage in your negotiations. Having strong credit may indicate you’re likely to repay your balances and what you owe, so credit card companies may be more willing to meet your requests.
2. Build your credit first if you need to
If you find your credit is less-than-optimal, you may want to work to build your credit health so you look more creditworthy to the bank.
Try to keep your credit utilization rate — the percentage of your credit limit that you’re using — at 30% or less.
Leslie Hollerman, founder of Pocket Blueprint, says great credit gives you the best odds of getting a lower interest rate. For that reason, he suggests keeping a positive payment history.
Before starting his company, Hollerman previously worked at a national bank and received many requests from cardholders for lower interest rates.
“Review your credit reports at least once a year for accuracy,” he says. Errors can pull your scores down, so you’ll want to catch and dispute any mistakes you find.
3. Find competing credit card offers
Credit card companies and banks need to compete with other brands to acquire more customers. That means they need to stay competitive with their rates.
Do your homework and look at other available credit cards. If you find a similar card to yours that offers a better rate, note the card’s name, company and terms. You’ll want to share this information when you reach out to the bank.
4. Understand the credit card company’s perspective
You can better negotiate if you understand what the bank or credit card company needs to see on their end to agree to your request. Hollerman explains that sometimes his bank would need to ensure customers were lower-risk before agreeing to drop the interest rate.
He says if you pay off, or significantly pay down, an outstanding balance, it may result in better credit scores. “Once reflected on your credit reports, a rate decrease could be much more likely.”
5. Call and make your request
Now you’re ready to get your credit card and call the customer service number listed on the back. When you reach a representative, politely explain the reason for your call.
If you have good credit, you can remind the representative of that and point to your history of being a good customer (by regularly using your card and paying your bills on time).
You may want to share your information about the other offers available from different companies, and explain why you may transfer your balance to a new credit card if you can’t get a lower interest rate from your current company. You can also ask if they will at least match the interest rate on a competing card.
6. Don’t be afraid to negotiate again in the future
John Rampton, owner of Due, has successfully negotiated lower rates for his credit cards and does so periodically. He says to expect to haggle and recommends you don’t give up after one call.
From his experience, credit card companies seem more willing to offer lower rates when you ask after making consistent payments on your card for at least six months. He follows up with requests every six months to ask for lower rates until he receives a “no.”
7. Negotiations not working? Try a balance transfer card instead
Balance transfer cards may provide you an alternative for getting a lower interest rate on your current credit card debt. This may allow you to consolidate your existing balances from multiple cards onto a single, new card.
You’ll want to use a credit card with a 0% introductory annual percentage rate (APR) offer for balance transfers to save money on your debt repayment. Here are some cards to consider.
Recommended balance transfer cards
|Best for low rates and fees on balance transfers||Chase Slate®|
|Best for a longer 0% intro rate period||Citi® Diamond Preferred® Card|
|Best for rewards while saving on your interest rate||Citi® Double Cash Card|
There’s a $0 introductory balance transfer fee for transfers made during the first 60 days of account opening. If you transfer a balance after that, the fee jumps to 5% or $5 minimum.
There’s also a 0% intro APR for 15 months on purchases and balance transfers (then a 16.49% - 25.24% variable APR).
Cardholders receive an introductory APR on balance transfers for 21 months (but balance transfers do come with a fee of 5%; minimum: $5). Cardholders receive an introductory APR on purchases for 12 months. After the intro period, the variable APR on both is 14.49% - 24.49%.
Receive unlimited 2% cash back — 1% when you charge to the card, plus an additional 1% when you pay for those purchases. You also get a 0% introductory APR for 18 months on balance transfers (although those don’t earn cash back). After the intro period, the balance transfer variable APR jumps to 14.99% - 24.99%. There’s also a balance transfer fee of 3% (minimum $5).
Here’s what to keep in mind if you want to learn how to negotiate with your bank or credit card company to lower your credit card interest rate:
|Do your homework first. Know your credit and information for other card offers. You can use both pieces of information to negotiate.||Don’t go into the negotiation without being prepared. Know what you’re asking for, why you’re asking for it, and other offers that are available.|
|Do ask to speak to a manager if the initial representative says “no” or seems unhelpful.||Don’t settle for a flat “no.” If your request is declined, ask for an explanation of why and how to change your situation to get the interest rate you want.|
|Do be friendly, polite and easy to work with. Customer service reps are people too, and they likely want to help you. Remember that any limitations are likely due to company policy, not that one individual.||Don’t be rude or belligerent. Don’t lie to the representative, either. They can always check your account history, after all.|
|Do call again if your initial request for a lower interest rate is declined. And even if you do achieve a lower rate, you can still try to call back in six months to see if you can access an even lower rate on your credit card.||
Don’t give up after a single call. Call again — or consider exploring other options, like a balance transfer card.
Use this process for negotiating a lower rate with your bank or credit card company. If you succeed, you might be able to save on your debt repayment and pay down your balances faster.