Key takeaways
- The best way to avoid high interest charges is to pay off your credit card balances every month.
- If you want to ask your credit card issuer for a lower interest rate, gather info about your credit score, payment history and competing credit card offers before you call.
- If your credit card issuer won’t lower your rate, consider asking for a temporary reduction or other benefits before looking for other lower-interest options.
Credit cards can be a valuable tool for earning rewards and taking advantage of consumer protections, yet there’s a literal price to pay if you carry a balance.
That price comes in the form of credit card interest rates, which can range from higher than you probably want to pay to downright exorbitant. The current average APR on a credit card is over 20%, and the Federal Reserve is unlikely to lower the federal interest rate amid persistent inflation. And 20% is just the average -- many of the best rewards credit cards charge much higher rates than that.
There are ways to get your credit card interest rate lower, though, even while keeping the current card you have.
What to know before asking for a lower credit card interest rate
Before calling up your credit card company and starting a negotiation, we recommend some advance preparation.
Find out your credit score
If you’re attempting to lower your interest rate, your credit card company will first check your payment history and credit score. It can help to know where you stand before you request a lower APR, so you should check your credit score before you do anything else.
You may have access to your credit score through your credit card. For example, Chase offers Chase Credit Journey and Capital One has Capital One CreditWise. Neither require you to be a Chase or Capital One cardholder to take advantage.
You should also habitually check your credit reports for inaccuracies and to see your payment history and debt-to-income ratio, or DTI. Reviewing your report and checking for late payments or other blemishes will give you a sense of how assertive you can be when asking for a lower rate. If you find incorrect information, you can dispute it with the credit bureaus.
You can get a free copy of your credit report every week from each credit bureau at AnnualCreditReport.com.
How do issuers determine your card’s interest rate?
Your current interest rate is based on your creditworthiness and credit score, or at least your credit range when you applied for the card.
Where having good or excellent credit typically means qualifying for lower rates in a card’s advertised range -- credit cards generally provide a range of what your interest rate could be -- having fair credit or imperfect credit almost always leads to higher rates.
This is just another piece of the puzzle when it comes to negotiating a lower interest rate on your credit card. If your credit score has improved since you initially applied for the card, you could use that as justification for asking for a lower rate now.
Compare competing offers
Take a look at some of the best credit cards to research the interest rates of competing credit cards. Save any preapproval emails or physical mailers you receive or look for similar cards with lower rates to learn what other offers are available.
Coming to the conversation with as much information as you can gather will give you a stronger position for negotiation.
How to ask your credit card provider for a lower interest rate
Once you feel ready to ask your card issuer for a lower interest rate, the negotiation can begin. Here are four steps to help you secure a lower interest rate on a credit card you already have.
1. Call your card provider
Contact your credit card issuer using the number on the back of your credit card and explain why you would like an interest rate reduction. Start by highlighting your history with the company and mention your good credit and history of on-time payments.
Next, mention any lower credit card rates you’ve been offered or found in your research. For example, you can tell your card issuer about a better competitor rate to see if the company will match it.
2. Don’t settle if your request is denied
The credit card company might initially deny your request or offer a new rate that is still higher than you hoped, but you don’t have to settle if the resolution doesn’t meet your expectations.
You can always ask again or request an explanation for the decision. If you feel like you’re not getting anywhere on your first phone call, try the HUCA method -- hang up, call again -- to see if you get better results with another representative or a manager.
3. Ask for a different benefit
If the company refuses to lower your interest rate, ask what else it can do to keep you as a customer. Some customer service agents might have the authority to offer bonus points or additional incentives instead of a lower rate, but you’ll never know unless you ask.
4. Request a temporary rate reduction
If you’re worried about paying down a balance with your current interest rate, ask for a temporary reprieve. The issuer might offer you a lower interest rate for a short period of time. This may not be the best long-term solution, but getting a lower interest rate in the short term could help protect your finances while you figure out your next steps.
Alternatives to consider
If your card issuer won’t grant your request for a lower interest rate, consider these alternative options.
1. Apply for a balance transfer credit card
A balance transfer credit card comes with an introductory 0% APR for a limited time, usually between 15 and 21 months, after which the APR will increase to the standard variable rate. Having up to 21 months without any interest payments can give you some breathing room to pay down as much debt as possible before the standard rate kicks in.
If you opt to apply for a balance transfer credit card, balance transfer fees (typically 3% to 5% of the transferred balance) often apply. Also, be aware that many of the best balance transfer credit cards require good to excellent credit to be approved.
2. Apply for a debt consolidation loan
A personal loan can also help you pay off credit card debt with a lower fixed interest rate and a set monthly payment that will not change until the loan term ends.
Loan terms usually outlast the introductory period on a balance transfer credit card by years. And while the interest rate isn’t as low as 0%, personal loan rates can easily be below 9%, which is much lower than your standard credit card’s APR.
In the case of a debt consolidation loan, you could roll the balances of several cards into one loan with a lower interest rate, make just one payment each month and stop using credit cards until you become debt-free.
3. Create a debt repayment plan
If you don’t want to apply for another credit card or loan, starting a budget (or tightening your existing one) and making a plan to pay off your credit card debt faster can help. If you have multiple card balances, employ the avalanche method by making the minimum payment on all cards and using any extra funds to pay down the card with the highest interest rate first.
From there, you’ll “avalanche” additional funds freed up with each bill you pay off, so you can work your way down your list of debts until they’re eliminated.
What is a good credit card interest rate?
Since the average credit card interest rate is over 20% right now, getting a rate lower than this could be considered good. But your credit card APR depends on your credit score. If you have excellent credit, you’ll typically qualify for a lower APR than someone with fair or “bad” credit.
Also, remember that some credit cards offer an introductory 0% APR for a limited time. If you want to save the most on interest, finding a card that offers an intro 0% APR on purchases, balance transfers or both for as long as possible can go a long way.
No matter what APR you qualify for, it’s best to avoid interest charges altogether -- if you can -- so you never have to worry if your interest rate goes up in the future.
How a lower interest rate can help your finances
If you have a balance on a credit card, paying a lower interest rate can help your finances in more ways than one.
First, securing a lower interest rate on credit cards means more of each monthly payment goes toward the principal balance instead of interest, which can help you pay down debt faster. Second, a lower interest rate means you’ll spend less on interest charges overall.
The best advice: Avoid credit card interest altogether
The best way to avoid high interest charges is to get into the habit of paying your credit card balances off every month. You can also enroll in automatic payments to make payments each time you use your card to simplify the process. Using your credit card like a debit card is a good tactic to help avoid carrying a balance.
The bottom line
While avoiding credit card interest altogether is the best course of action if you want to save money while using credit, this isn’t always possible. However, you should still strive to avoid situations where you’re carrying a balance without a concrete plan to pay it off -- or when you’re paying more interest than you really need to.
In the latter scenario, you may be able to get your card issuer to lower your interest rate. You could also use a balance transfer offer to get an introductory 0% APR for a limited time.
Credit card interest has a way of sneaking up on you when you’re not careful, and even the best 0% intro APR offers don’t last forever. Whether you carry a balance from time to time or not, keeping an eye on your debt and trying to minimize the amounts you borrow is always a good idea.
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