How to Lower Your Credit Card Interest Rate

Written by |

Credit cards can be great tools to have in your wallet. They allow you to make a purchase now and pay it back later. Unfortunately, they’re also the reason why so many Americans struggle with debt.

Credit cards are known to often come with high interest rates. As of March 2020, the average interest rate on a credit card is 17.25%. With rates that high, carrying a balance can get extremely expensive.

If you are one of the millions of Americans that’s carry a balance on your credit cards, there are things you can do to reduce how much you’re paying each month.

What Is a Good Interest Rate on a Credit Card?

Before we dig too far into figuring out how to lower your credit card interest rate, we need to understand what a good interest rate on a credit card would be.

Most of you have probably received an offer for a 0% APR card. These cards are great, but can be deceiving. Many times you will receive a low APR for a short introductory period. However, when that runs out, the interest rate jumps — sometimes to well over 20%.

So what is a good interest rate on a credit card? The answer to this really depends on your situation. Ideally, the interest rate won’t matter because you’re paying your balance in full each month.

But if you do need to carry a balance from one month to the next, know that reward credit cards and cash back cards almost always come with higher interest rates. Ideally, your card will come in below the average.

Negotiating a Lower Interest Rate

Credit card interest rates are tied to prime rates. That means each time the Federal Reserve shifts rates, your credit card is probably going to be impacted. If the interest rate on your card is higher than you’d like, the best first step you can take is to call the credit card company to see if they’d be willing to work with you to pay down your debt.

Credit card issuers understand that as a consumer, you have options. They value your business and most of the time will do just about anything to keep it.

But before you sit down to make a phone call, make sure you are prepared. It will help increase the chances the call goes the way you want. Here are a few tips for negotiating a lower interest rate:


Do Your Research Before Making the Call

Before you make the call to your credit card issuer, make sure you’re prepared. Know what your current balance is and what APR you’re paying. It’s always better to be over-prepared than not prepared enough.

Look into other credit cards that are available. Understanding what else is out there and the rates they charge, will give you added leverage.

Finally, check your credit score. A strong credit score is a good indicator that you are more likely to pay back what you owe. This can only help increase the chances of having your interest rate lowered.

If your credit score is lower than you’d like, it might be best to spend some time working to improve it. Once it’s at a level you like, then you can make the call.

Start With the Oldest Card in Your Wallet

Credit card issuers love loyal customers. If you have multiple cards in your wallet, start by calling the card you’ve had the longest. Because the cost to acquire new customers is high, they are going to be more willing to work with someone that has been a customer for a long period of time.

Making the Call

Once you have yourself prepared, it’s time to make the call. If you’re feeling nervous, don’t be. The worst they can  do is say “no.”

On the back of each credit card there’s a customer service number. This is the number you’ll want to call. Once you have a representative on the line, let them know you’d like to talk about lowering the interest rate on your credit card. Let the conversation proceed from there.

Having done all the research beforehand, you’ll be in a much better position to succeed. But it’s not always going to happen. Don’t give up if you receive a “no.” It’s okay to be persistent, just don’t be pushy.

If the representative informs you that they can’t lower your interest rate, find out why. Then ask to speak with a manager. Go through the entire process over again and see if you get the result you want.

If you still don’t get approved for a lower rate, all hope shouldn’t be lost. If there was a specific reason why you were denied, work on that to make sure it’s not an issue moving forward. Give your issuer a call back in a few weeks and try again.


Apply for a New Low Interest Credit Card

Lowering the interest rate on your existing credit card is almost always going to be better than moving your balance. Each time you apply for a new card your credit score, will take a small hit. Unfortunately, if money is tight and you need to reduce the amount you’re paying each month, sometimes a balance transfer is the only way to go.

There are several low interest credit cards available, but do some research before applying. Pay close attention to any type of balance transfer fee that you might have to pay. Make sure the benefit is going to outweigh the cost.

Also, if the card comes with a introductory interest rate, make sure you know what it will be when the introductory period is over. The last thing you want is to end up with an interest rate at the same level or higher. If you end up in an endless cycle of high interest debt, it’s going to be tough to make any progress.

More Credit Card Information From

How many credit cards should I have? How Many Credit Cards Should I Have? - Are you worried that the number of credit cards you have could have a negative impact on your financial life? Is there a “right” number of credit cards for one person to have in 2024? The answer is a little…
Welcome bonuses can be a great way to boost the value of a credit card. Best Credit Card Sign-up Bonuses for 2024 - Team Clark spent hours reviewing the market for credit card sign-up bonuses and evaluated them according to the guidelines for usage set by money expert Clark Howard. Clark believes credit cards with exorbitant annual fees are a bad idea for most…