How to Lower Your Credit Card Interest Rate

Credit cards can be fantastic financial tools if used correctly, but if you’re like 47% of Americans, you have outstanding credit card debt eating into your paycheck. Relative to other types of credit, credit cards can have high interest rates, some stretching above 20% annual percentage rate (APR) It is, therefore, generally a good idea to avoid carrying a balance on your card(s) from month to month.

High interest rates make it much harder to put a dent in your debt, especially since more of your money is going towards interest than the principal balance every time you pay your bill. It can seem hopeless if you are in this situation, but did you know that you can negotiate a lower interest rate on most credit cards? Here’s how.

Contact the credit card company you’ve been with the longest

It’s best to start by calling the issuer of the credit card you have had the longest, especially if you have had a good relationship with that company. Longer, detailed credit histories mean something to credit card companies, so those you’ve been with for a while are much more likely to reduce your interest rate than your newer accounts.

Ask for a temporary reduction

If you don’t receive a drop in your interest rate at first, you can also ask for a temporary reduction. If your credit score has recently increased, use that to your advantage.

Try again a few months later

At the end of the day, credit card companies are run by people like you and me. Call back in a few months and ask again! It won’t hurt your credit, especially if you continue to make payments. Card policies may have changed and the person on the other end might be more willing to reduce your rate, or perhaps your credit has improved enough over that short period to warrant a change.

Keep an eye out for promotions on your existing cards

Given the current economic climate, some companies that offer rewards cards, like American Express or Chase, have recently started offering drastically lower temporary rate reductions in the 3-5% APR range. Usually, these promos are only found online and require you to opt in. Keep an eye on your digital banking and credit card portals for offers like these, and don’t forget to read the fine print!

Contact your other card issuers

Starting with the credit card accounts you’ve had the longest is the most likely way you’ll reduce your overall interest rates since you have an existing history with them. Don’t stop there though! If you have more than one card, keep going down through the list until you’ve contacted them all, then repeat the steps in a few months. Note that you’ll see the biggest change to your personal bottom line by reducing the rate of your highest interest card or the card you carry the highest balance on.

Even if you don’t carry a balance on your cards, it is a good practice to regularly audit your financial tools—including your credit cards—to see if there are any opportunities to save money. Little changes here and there can really add up over time!