Key takeaways
- If your credit card’s interest rate is too high, you can call and negotiate with your provider.
- You can also apply for a balance transfer card, debt consolidation loans, or ask for a hardship plan, all of which can help lower the interest on your debt.
- A lower interest rate can lead to significant savings and faster debt reduction.
Credit cards are incredibly useful. You can use them anywhere, earn rewards, and take advantage of consumer protections. But if you carry a balance, you’ll have to pay a price: interest.
Interest rates on credit cards have always been high, but with inflation, they’ve reached an average of 23.37% APR (annual percentage rate). Many rewards cards or credit cards for consumers with poor scores charge much higher rates than that.
If you’re unhappy with your current interest rate, know it’s not set in stone. You have the power to change it. Let’s go over how to lower your credit card interest rate. It can be as simple as calling your issuer.
Jump to:
- What to know before asking for a rate reduction
- How to ask for a lower interest rate
- Improving your credit score can help you secure a lower rate
- What is a good credit card interest rate?
- Other ways to pay less interest
- Does a lower interest rate trigger a hard pull?
- How can a lower interest rate help you?
- Bottom line
What to know before asking for a rate reduction
Anyone can request a lower rate on their credit card, but it helps to be prepared. Have all your facts together, be ready to negotiate, and don’t be afraid to use offers from competitors as leverage.
Look up your credit score
Your credit score is a key factor in determining your interest rate. Higher scores typically mean lower interest rates, and conversely, lower scores lead to increased rates.
Find out your score so that you know where you stand. If you’ve improved your score, you’ll have some bargaining power.
While you’re at it, review your credit report for errors. You can get your report from each of the credit bureaus – Equifax, Experian, and TransUnion – for free once a year via annualcreditreport.com. If you find any errors, dispute them with the issuing bureau. Getting negative marks off your report can immediately boost your score.
How do issuers set your interest rate?
Every issuer has its own process, but most consider two main factors: the prime rate and your creditworthiness.
Credit card companies typically use the Wall Street Journal prime rate as their benchmark. The prime rate is directly linked to the federal funds rate. The issuer will review the current prime rate and add a margin on top of it.
Your credit score highly influences individual interest rates. Consumers with excellent credit will get the lowest rates, while those with poor scores receive the highest.
Compare competing credit card offers
Credit card companies want your business. They are often willing to offer better terms if you show them more attractive offers from competitors.
Save any preapproval mailers or emails you receive. Look for cards that offer lower interest rates within your score range. Then, use these competitive offers as leverage in your negotiations. The more information you have, the stronger your position will be.
How to ask for a lower interest rate
Once you’ve gathered all the information and feel prepared, it’s time to call and negotiate.
Call your credit card provider
You can usually find your provider’s number on the back of your card. Call them and explain why you would like an interest rate reduction. Tell them how you’ve been a loyal customer. Highlight your history of on-time payments, responsible usage, and good credit score.
Next, mention any offers with lower rates you’ve received from other companies. The representative you’re speaking to may be able to match it.
Remember to remain calm and polite throughout the conversation.
Sample script for negotiation
“Hello, my name is [Your Name], and I’ve been a customer with [Card Issuer] for [X] years. I’ve consistently made on-time payments and used my card responsibly. Recently, I received some offers with lower interest rates from other providers and would appreciate it if you could review my account for a possible rate reduction. Thank you for considering my request. I really value my relationship with [Card Issuer].”
If denied, try again
If your request is denied, don’t give up. Hang up and call back. The next representative you speak to may have a different answer.
You can also request to speak with a supervisor. Sometimes, representatives do not have the authority to adjust your account. Speaking with a supervisor may lead to better results.
If you’re still not satisfied, ask for an explanation. If you’re score’s too low or you’ve had recent late payments, consider waiting three to six months before trying again. Use the time to establish a history of on-time payments and improve your score.
Ask for a temporary rate reduction
If a permanent rate reduction isn’t possible, ask for a temporary one. An issuer may be more willing to help you for a few months rather than permanently.
A lot of credit card companies offer hardship plans that will reduce your APR by 1 to 3 percentage points, waive fees, or reduce the monthly minimum payment temporarily.
Take advantage of any reduction you can get to pay off your balances so you’re no longer accruing interest.
Improving your credit score can help you secure a lower rate
Credit card providers give lower rates to customers with higher scores.
To build credit, you should:
- Always make payments on time
- Spend less than 30% of your credit limit
- Keep your accounts open for a long credit history
- Avoid opening new accounts frequently
- Have a mix of loans and cards
As your score improves – or after six months of consistent on-time payments – try negotiating again. Many issuers are willing to lower interest rates for customers with a proven track record of reliability.
A lower rate can lead to significant savings and better financial stability.
Ready to walk away from your credit card debt?
What is a good credit card interest rate?
A good interest rate is one that’s below the national average APR. The latest Federal Reserve G.19 consumer credit report put the average credit card interest rate at 23.37% in August 2024, up from 22.63% in the first quarter of 2024. With rates this high, anything lower can definitely be considered good.
Do note that rewards cards often carry higher interest rates. Also, if you have a poor or fair score, you should expect a higher APR.
Knowing the national average and the standard interest rates for your card type and score range can help you determine if the APR you have is good.
Other ways to pay less interest
Asking your credit card issuer for a lower rate isn’t always effective. If it doesn’t work, don’t worry. There are other ways to get a lower interest rate to help pay off debt.
Explore balance transfer cards
Balance transfer credit cards with a 0% introductory APR let you pay less interest for a limited time. The introductory period generally lasts anywhere from 12 to 21 months.
These offers typically come with balance transfer fees of 3% to 5% of the transferred balance. Depending on your credit limit, you may only be able to transfer part of your outstanding balance. They are also typically reserved for applicants with good to excellent credit.
Applying for a balance transfer card is a great way to pay off credit card debt and save money on interest. Make sure to repay the debt before the introductory rate ends, as rates may rise significantly afterward.
Apply for a debt consolidation loan
Personal loans are another way to consolidate and pay off debt at a reduced interest rate. Most personal loans come with lower interest rates than credit cards. Once again, the best rates are reserved for applicants with good to excellent credit.
With a debt consolidation loan, you combine multiple balances into one with a lower interest rate. You end up with one fixed monthly payment. Your bills are simplified, and you save money on interest.
Need a loan but have bad credit?
Enroll in a debt repayment plan
If you have multiple high-interest credit card balances, a debt management program (DMP) from a reputable non-profit credit counseling agency may be the way to go. When you enroll in a DMP, the credit counselor will help you create a plan to pay off your debt in three to five years. They will negotiate with your card issuer for lower interest rates or waived fees to save you money.
Debt management plans are a highly effective way to pay off debt, but they do take dedication. You will likely have to close your accounts and stick to a strict repayment plan. It can be challenging, but in the end you’ll be debt-free for less.
Does a lower interest rate trigger a hard pull?
The hard truth is that requesting a lower interest rate may trigger a hard pull, and it may not. It all depends on your provider.
A hard pull typically occurs when you apply for a new card or request a credit limit increase. The issuer will want to check your score and credit report to make sure that you can handle additional debt.
The same isn’t true with interest rate reductions. Many issuers will treat this as a simple request and do a soft inquiry or none at all. Major credit card issuers, including Capital One, Discover, and Citi, have stated they do not conduct a hard pull when a customer asks for a rate reduction.
Each provider has its own rules regarding interest rate reduction requests. If you’re concerned about a hard inquiry, the best thing to do is ask your provider if requesting a rate decrease will mean a hard pull.
How can a lower interest rate help you?
A lower interest rate can help get you out of debt faster. When you have a higher APR, more of your monthly payment goes towards interest. When you have a lower APR, more of your money goes towards reducing the principal balance. The faster you reduce the principal, the faster you’ll get out of debt and save money.
Reducing your debt levels can also improve your credit score. The second most important scoring factor is how much of your available credit you use or your utilization ratio. When you pay off your debt, you’ll lower your utilization ratio and improve your score.
Frequently asked questions
1. What can I do if my request is denied?
If your request for a lower interest rate is denied, ask the customer service representative for an explanation. Consider calling back to speak with a different representative who might be more receptive to your appeal. You can also request to speak with a supervisor, who might have more authority to make changes. Maintaining a calm and respectful demeanor during your negotiation increases your chances for a positive outcome.
2. How often can I request a lower interest rate?
It would be best to wait three to six months before making another request. During this time, make timely payments and reduce your balance. Doing so will strengthen your case for future requests.
3. How much can I save by lowering my interest rate?
A lower APR can lead to significant savings and faster debt repayment. If you have a 20% APR and you manage to negotiate it down to 15%, you could save hundreds annually, depending on your balance. For instance, on a $5,000 debt, this reduction could save you $250 each year.
4. Can I lower my interest rate without a good score?
It’s more challenging but possible. One option is to speak with a customer service representative about temporary hardship programs. While these will not permanently reduce your rate, they can provide short-term relief, especially if you’re facing financial difficulties. Or you can establish three to six months of on-time payments before you call. Demonstrating that you are reliable will help your case even if your score isn’t in the good range yet.
5. What factors help in securing a lower interest rate?
A good score, on-time payment history, and low debt-to-income ratio can strengthen your case. Showing you’re a low-risk borrower assures issuers, increasing the likelihood of them granting a rate reduction.
Bottom line
Credit card providers may lower your interest rate if you ask. It’s not guaranteed, but a request won’t hurt.
The best thing you can do, though, is avoid interest altogether. Only purchase items on credit you can afford to pay for with cash. Then, pay your bill in full and on time every month. You won’t be charged a dime in interest.
Paying in full isn’t always possible. If you find yourself in debt, it helps significantly to have a low interest rate. Ask your credit card issuer for a reduction. If they deny your request, ask for temporary hardship or apply for a card with a 0% APR. There’s no shortage of ways to get a lower rate. If one doesn’t work, simply try another. A lower interest rate is one of the easiest ways to save money.
