Credit cards can be a convenient way to pay for things while building credit and earning rewards. Those benefits, however, can be acutely undermined by a high interest rate. Credit card rates typically sit at a whopping 15% to 20%. At those rate, paying off a balance of $10,000 would cost you thousands of dollars over just a few years. Show
An open secret of the industry is that credit card interest rates are negotiable. And we'll tell you exactly how to do it. What you need to know firstBefore calling up your credit card company and starting a negotiation, we recommend some advance preparation. Figure out your credit scoreSome of the first things your credit card company will look at are your payment history and credit score. You can order a free annual credit report to ensure it's accurate and to see your payment history and debt-to-income ratio (DTI). Reviewing the report -- checking for late payments or other blemishes -- will give you a sense of how assertive you can be when asking for a lower rate. Read more: The best credit monitoring services Collect competing offersYou'll also want to research rates competing credit cards are offering. (We recommend checking out our best credit card lists to see the most competitive offerings right now.) Save any preapproval emails or postcards you receive, or look for similar cards with lower rates to learn what other offers are available. Coming to the conversation with information ammunition will give you a stronger position for negotiation. How to ask your credit card provider for a lower interest rateOnce you feel ready to ask for a lower rate, the negotiation can begin. Here are four steps you could take to negotiate a lower interest rate.
Alternatives to considerIf your credit card company doesn't provide you with the reduction you were hoping for, there are alternatives.
The best advice: Avoid credit card interest altogetherThe best way to avoid high interest rates is to eliminate paying interest in the first place. Get into the habit of paying your credit card balances off every month, so you never have to worry about how high your interest rate is. Enroll in automatic payments to pay your balance in full each month or make payments each time you use your card. Will credit card companies lower your interest rate if you ask?They may decline your request, but it doesn't hurt to ask. If you've established a history of on-time payments and other responsible behavior with the issuer, leverage this information to your benefit. A lower interest rate can ensure you pay less in interest over time, so it's worth asking.
How can I lower my monthly credit card interest?5 Ways to Reduce Credit Card Interest. Pay off your cards in order of their interest rates. ... . Make multiple payments each month. ... . Avoid putting medical expenses on a credit card. ... . Consolidate your debt with a 0% balance transfer card. ... . Get a low-interest credit card for future spending.. How can I avoid paying interest on my Bank of America credit card?You can avoid interest charges altogether on your Bank of America credit card by paying your balance in full and on time each month. Bear in mind, interest is charged from the day you withdraw cash from an ATM or bank and there is a cash advance transaction fee associated with cash advances.
How do you negotiate a lower interest rate?Call your card provider: Contact your credit card issuer and explain why you would like an interest rate reduction. You could start by pointing out your history with the company and mention your good credit or on-time payment history.
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