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Tuesday, April 7, 2020

How to lower your credit card interest rate

There are steps you can take to increase your chances of getting a lower APR - even if you don't have perfect credit


Summary

If you have credit on your credit card, a high APR can make it difficult to pay off your debts. However, you can take steps to increase your chances of a lower interest rate - even if you don't have a perfect balance. Here's how.

If you have credit on your credit card, a high APR can make it difficult to pay off your debts - especially if a tight budget hampers your ability to increase your monthly payments.
If you can't afford to pay more than $ 150 a month for your credit card, a $ 5,000 credit on a 24% APR card can take almost five years to pay off and 3,323 US dollar interest costs.

A larger balance would require an even higher minimum payment. With a $ 8,000 account balance, you may need to spend $ 240 a month to avoid a failure. CreditCards.com's credit card payout calculator lets you calculate how long it would take to pay credit card debt and how much interest you would pay.

The higher your APR, the more difficult it could be to pay the minimum due.

The best way to avoid this scenario is to lower your credit card interest rate. That may sound daunting. However, you can take steps to increase your chances of a lower interest rate - even if you don't have a perfect balance.



How to lower your credit card interest rate


  • Take stock of your financial health and credit rating
  • Prepare a strong case for why you deserve a lower APR
  • Ask about your lender's financial hardship
  • Call your card issuer
  • Consider a bank transfer card

5 steps to lower your credit card interest rate

Before you put up with an unaffordable APR for credit cards, you should consider your options. You may be surprised at what lenders are willing to offer. For example, research by CreditCards.com has shown that more than half of cardholders who ask for a lower rate are successful.

Find out how to do it.

1. Take stock of your financial health and credit rating
Your best way forward depends on your monthly income and budget, your creditworthiness, your total debt, and your lender's credit card policies.

If you haven't already, check your credit rating to see how lenders assess your financial health. Your credit rating is crucial to determine what options are available to you. So don't move forward until you know where you are.

Many issuers offer free credit scores. Some lenders, like Discover and Capital One, don't even require you to be a customer to get one.

It is also a good idea to get a free copy of your credit report from AnnualCreditReport.com. In this way, you can check whether credit reporting errors or unauthorized accounts do not affect your score.

Finally, check your credit card statements and count all your credit. Then check the APRs for each open card. The debts on your card with the highest interest rate are the most dangerous for your budget. So this is the APR and the credit on the card, which you should ideally start with.



2. Prepare a strong argument for why you deserve a lower APR

Depending on your circumstances, you may be able to make a deal with your lender to lower your APR. However, lenders' policies vary, and some may be more willing to work with you than others - especially if you have a long relationship and have been a good customer.

Before trying to negotiate with your lender, take some time to find information that can convince you that you are a trustworthy, profitable customer, and deserve a better deal.

For example, write your current APR on a piece of paper, how often you use the card, and how much you usually top up. The more you use your card, the more likely a lender will try to work with you. Also note how many years you have owned your credit card. If you've recently opened it, a lender may not be willing to lower your interest rate so quickly.

Also research and note down other cards that offer a lower APR. This can be useful if you want to remind your lender that you can move your business to another location. It also helps you not to hurt your case by requesting an APR that is far below what others offer.

Finally, find the US base rate, the reference rate that you can use to set your APR, and subtract it from your APR. This information could help you argue with a lender that the difference between the base rate and what you are charged is too large.

3. Ask about your lender's financial hardship

You don't necessarily need a good credit score to convince your lender to give you a break. Your credit card issuer may be ready to lower your interest rate - or work out an alternative repayment plan - if you can show that you are really having financial difficulties.

Check with your lender about the types of policies they offer and write down why you are having specific problems paying your debts. Lenders don't want you to be in arrears with your loan, so they may be more willing than you think to work out a plan.

You may also want to get help from a nonprofit credit counselor who can help you review your financial situation and give you advice on how to apply for a lower interest rate.

To decide on formal debt management plan, a credit advisor will even negotiate with lenders for you. Unlike basic credit counseling, this service usually requires a fee.

4. Call your card issuer

When you have gathered enough information to discuss your case, call your card issuer and politely ask them to speak to a representative about reducing the APR on your card, make sure you have your notes in front of you, and be ready to address your research or additional details on your personal experience if a customer service representative is slow to offer you a better deal. If you get a no, don't be afraid to call back or speak to someone else. Another representative or manager may be more receptive.

5. Consider a bank transfer card

If you can't get your credit card issuer to lower your interest rate, it may be time to switch to another lender.

If you have good to excellent credit, you should be able to qualify for a credit transfer card with a low or 0% introductory APR. However, be careful: many prepaid transfer cards charge costly prepaid transfer fees (typically 3-5%) and high APRs once the promotion ends.

If your credit rating is low, you may have trouble qualifying for a top balance transfer card. However, there are some cards that offer transfer rates for advertising credit to consumers with lower scores.



How to ask for a lower price

Wait until you have enough time to be on hold without stressing about it. With an efficient customer service representative, your call can only take five to 10 minutes. Repeatedly on hold can take up to 20 minutes or more.

Make yourself comfortable. Spread your notes and account information in front of you. And make sure you have something nearby that will keep you busy if you are repeatedly put on hold. It could be a great time to get news, end a sudoku, or scroll through Twitter.

When you contact a customer service representative, provide your name and how long you have had your credit card.
Then, indicate as nicely as possible that you want to talk to someone about lowering your credit card APR.
The customer service representative may forward you to another person, e.g. B. to a manager, or he offers to work with you himself.
Explain why you think you deserve a lower APR and try to include as many compelling details as possible.
The better prepared you are - with information about your card usage and a positive credit history, as well as other important details - the more convincing your argument will be towards lenders. Also consider specifying your desired APR.

If a customer service representative says no, ask why. They may only be able to offer you a certain amount, and it is also worth asking if they can offer you anything else.

If the representative agrees to lower your tariff, request a written confirmation. And if this time they're not ready to help you, don't give up. You can try again at any time.

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