Credit card debt can be a significant financial burden, and a high Annual Percentage Rate (APR) only compounds the problem.
Many cardholders feel trapped by steep interest rates, unaware that there are strategies to potentially lower their APR. Reducing your credit card’s interest rate can lead to substantial savings over time and help you pay off your balance faster.
In this guide, we’re going over practical steps for how to lower credit card interest rate. In the meantime, MoneyLion can help you explore a wide variety of credit card options tailored to different needs and preferences.
MoneyLion can help you explore a wide variety of credit card options tailored to different needs and preferences.
Will credit card companies lower your interest rate if you ask?
Yes, credit card companies may lower your interest rate if you ask. While there’s no guarantee, it’s definitely worth a try, especially if you have a positive credit history and a long-standing relationship with the credit card issuer.
To increase your chances of success, be prepared to discuss your financial situation and reasons for requesting a lower rate. You might mention factors like on-time payments, increased income, or reduced debt.
Additionally, consider offering to increase your credit limit or open another account as a gesture of goodwill. We’ll go over some of the best practices to follow to increase your chances of lowering your credit card interest rate.
How to lower interest rate on credit card
There’s no guarantee that your credit card company will lower your interest rate. However, that doesn’t mean you shouldn’t reach out and try asking!
Having a solid relationship with your credit card issuer will only work in your favor when it comes to trying to get a lower credit card interest rate. The following tips can help get you there.
Pay your balance in full
One strategy for reducing the APR on your credit card is to make sure that you pay off your balance in full every month. This is important because any outstanding balance will accrue interest at the APR rate, so the more you pay off each month, the lower your overall cost of credit will be.
It’s also important to pay your bill on time as any late payments can result in late fees and additional interest being charged.
Paying your balance in full and on time may help you qualify for lower rates and give you leeway when negotiating with creditors.
Negotiate lower APRs
Another effective strategy for reducing APR on credit cards is to negotiate with your credit card company. Although not all card issuers will be willing to negotiate, it’s worth asking as it could save you a lot of money in the long run.
If you have a good payment history, it’s worth asking for a lower rate as many companies will be willing to reward their more loyal customers. Many companies also are willing to negotiate lower interest rates with customers who have strong credit scores.
Also, if you’ve found a lower rate elsewhere, you can use this as leverage when negotiating with your credit card company. It can help knowing in advance that you’re pre-approved for other credit cards with better interest rates. Learn more here.
Shop around for the best interest rates
One of the most important strategies for lowering the APR on a credit card is to compare and shop around for lower-interest credit cards.
Credit card companies are constantly competing with one another to offer the best rates and rewards to their customers. By thoroughly comparing the different credit cards available, you can find the one that offers the lowest APR and the best terms.
Take advantage of special offers or promotional rates
Credit card companies often offer promotional rates to incentivize customers to use their cards and help them save money. Promotional rates can be applied to both purchases and balance transfers, and they can lower the APR on a credit card significantly.
To take advantage of promotional rates, research the offers available from different credit card companies and compare the terms and conditions of each. Read the fine print carefully to make sure you understand when the promotional rate expires, how much you will be charged after the promotional period ends, and any other applicable fees or charges.
Don’t be afraid to switch credit card companies
If you’re ultimately unable to negotiate a lower interest rate with your credit card company, don’t be afraid to switch credit cards.
There are many different credit card companies out there and you may be able to secure better terms, depending on your credit score. If you decide to switch, read the fine print carefully, and be sure you understand the new terms and conditions before signing any paperwork.
Consider a balance transfer
You may also be able to consolidate multiple credit card balances into one credit card with a lower interest rate. This can help you pay off your debt faster and reduce the amount of interest you pay.
A balance transfer can allow you to transfer the balances of higher-interest credit cards to lower-interest credit cards. Doing so may save hundreds or even thousands of dollars in interest payments.
Recommended: What Is A Balance Transfer Credit Card?
How to lower your APR on a credit card and save
Lowering your credit card’s APR can significantly impact your financial health, potentially saving you hundreds or even thousands of dollars in interest over time.
While there’s no guaranteed method to reduce your rate, a combination of improving your credit score, researching competitive offers, negotiating with your issuer, and considering balance transfer options can increase your chances of success.
Remember, persistence and patience are key. If your initial attempts don’t yield results, continue working on improving your credit score health and try again in a few months.
FAQ
Will credit card companies lower your interest rate?
Yes, credit card companies may lower your interest rate if you ask. It’s worth contacting your issuer and negotiating, especially if you have a positive credit history and a long-standing relationship with them.
What is an APR on a credit card?
APR stands for annual percentage rate. It is the amount of interest charged on a credit card balance. It is expressed as a percentage and is calculated based on the amount of money borrowed, the length of time it takes to repay the debt, and the interest rate.
How can I lower the APR on my credit card?
You can lower the APR on your credit card by shopping around for the best interest rate, negotiating with your credit card company, and making sure you pay your bills on time. You also may qualify for a balance transfer offer from another credit card company.
Can you negotiate credit card interest rates?
Yes, you can often negotiate your APR on credit cards. It’s worth contacting your issuer to see if they’re willing to lower your rate, especially if you have a long history of on-time payments and responsible credit use.
How can I improve my credit score to lower my credit card interest rate?
Improving your credit score can lead to lower interest rates or better credit card offers. Make sure to pay bills on time, keep your credit utilization low, limit new accounts, and dispute any errors on your credit report. Learn how to improve your credit score fast here.
