How to Negotiate a Lower Interest Rate on Your Credit Cards
16.15%, according to CreditCards.com. At this rate, paying out a $ 10,000 balance over four years would cost an additional $ 3,422.can be a convenient way to pay for things while and . However, these benefits can be acutely undermined by a high interest rate. Currently, the average credit card interest rate in the US is
An open secret in the industry is that credit card rates are negotiable. And we’ll tell you exactly how to do it.
What you need to know first
Before calling your credit card company and starting a negotiation, we recommend that you prepare beforehand.
Find out your creditworthiness
Some of the first things your credit card company will check are your payment history and credit history. You can a. to order free annual credit report to make sure it’s correct and to view your payment history and debt-to-income ratio (DTI). – Checking for late payments or other blemishes – gives you a sense of how confident you can be when asking for a lower rate.
Collect competing offers
You will also want to research the prices of competing credit cards. (We recommend ourLists to see the most competitive offers right now) Save or search for any pre-approval emails or postcards you get to see what other offers are available. When you get into conversation with information ammunition, you gain a stronger negotiating position.
So, ask your credit card provider about a lower interest rate
Once you feel ready to ask for a lower price, the negotiation can begin. Here are four steps you can take to negotiate a lower interest rate.
Call your card provider: Contact your credit card issuer and explain why you want an interest rate cut. You could start by pointing out your history with the company and mentioning your good credit history or on-time payment history. Now is the time to mention any lower credit card prices that were offered to you or found during your research.
Do not calm down: The credit card company can refuse your request for the time being or offer a minimal discount – but you don’t have to pay if the solution doesn’t meet your expectations. You can always ask for more or an explanation of the decision. If you feel like you are getting stuck on the first phone call, be diligent. Another time, call back and try your luck with another representative, or ask a manager to speak to you and take your case to a higher authority.
Ask about another benefit: If the company refuses to lower your interest rate, ask what else it could do to keep you as a customer; Sales reps can offer bonus points or additional incentives.
Request a temporary price cut: If you are concerned about paying off any remaining balance at your current high interest rate, ask for a temporary grace period that may offer you a lower interest rate for a short time.
Alternatives to consider alternative
If your credit card company doesn’t give you the discount you’re hoping for, there are alternatives.
Apply for a prepaid credit card: LotsHave no or low introductory APRs for a period of time, after which the APR will increase dramatically. But it might buy you some time. However, balance transfer cards always charge a debt transfer fee – usually between 3% and 5% – so make sure your potential savings outweigh the cost.
Create a debt settlement plan:(or streamline your existing one) and devise a plan to pay off your credit card debt faster. If you have multiple card balances, use the avalanche method by making the minimum payment on all cards – using any additional funds to pay out the card with the highest interest rate first. Work your way down until they’re all paid off.
Apply for a debt consolidation loan: Acan be a convenient way to pay off high-interest credit card debt. A debt consolidation loan allows you to combine the balances of multiple cards into one loan with a lower interest rate.
The best advice: avoid credit card interest altogether
The best way to avoid high interest rates is to eliminate the interest in the first place. Get in the habit of paying off your credit card balance every month so you don’t have to worry about your interest rate. Sign up for automatic payments to pay your balance in full every month, or make payments every time you use your card.