If you carry a balance on your credit card from month to month, you’re probably accruing some credit card debt thanks to interest rates. According to CNN Money, most people don’t necessarily pay attention to their interest rates, or APR, even though it can massively affect your monthly credit card bill if you have an outstanding balance.
Depending on the agreement you signed when you applied for your credit card, your interest rate could be increasing after a certain time period or when you reach a certain balance.To avoid getting crushed by accruing interest in your credit card statements, here’s how you can work on lowering your interest rates.
Be A Good Borrower
The best way to create a bargaining chip for your interest rate is to be a good borrower. Being a “good borrower” means the usual things, like paying your bill on time, keeping your credit limit down (typically below 35%). By making these a budget priority, you set yourself up for greater bargaining power.
Understand Your APR
Many companies will offer a 0% introductory rate, which is great, but make sure you know what the interest will be once that year is up. Your APR should appear on your monthly credit card statement.
Compare Your APR With Other Offers
Next, take a look at your interest rate and compare it to other offers. Where can you find these? Usually we dismiss them as “junk mail,” but for a couple weeks save (or at least take time to read) those notices you get in the mail from different credit card companies trying to make you offers. This will give you a realistic idea of what else is out there, and after looking at a few, you may decide that your current situation is the best offer after all. (from Simple Dollar)
If your credit history is a little iffy (ex: you’ve made some late payments or have a high balance), you may want to get these in order before trying to lower your interest rate. Take a look at our blog post on Credit Cards 101 for an in-depth look at these actions.
Call Your Credit Card Company
Look for a customer service phone number on a statement or back of your card. When you call, make sure you have your account number and interest rate offers from other providers nearby.
Sometimes the first person you speak with is not able to help you lower your interest rates, so politely ask to speak with someone who has that authority. Bankrate America has an example script for this type of conversation, and this article offers some helpful do’s and don’ts for this type of conversation.
If they aren’t willing to offer a reduced interest rate, you have a few options.
Option A) stick with the same company, try to improve your credit history (if this was given as a reason why your rates cannot be lowered) and try again at a later date.
Option B) Transfer your balance to a new account and try to reduce any debt ASAP while under a 0% interest introductory period. This will improve your credit and reduce your debt.
Option C) If a not-so-great credit history is your problem, then perhaps switching companies isn’t such a bad idea after all.
To get a lower interest rate on your credit cards, you have to do your research and make the phone call. Remember that being polite goes a long way, too! The worst thing you will hear is “No,” but remember, to get what you want, you have to ask and have a good reason for asking. Lowering your APR if you are carrying a credit card balance could save you hundreds a year and isn’t that worth having a 20 minute phone conversation?