Credit Card Articles
Lowering Interest on Credit Cards
Credit cards are not created equally. They are also not distributed equally. Each company and each card has its own gimmick, including the interest rate or APR that they give out. Some may only go so low and others may offer even lower with a great credit rating.
Credit cards all come with an interest rate. It's how they make money. Some give you great interest rates to start and then find any reason they can to increase it. Late payments and going over the balance will quickly increase your APR. When the interest rate is high, it makes it that much harder to make the monthly payments because what you pay isn't going directly to the balance, it's also paying off the interest.
There are ways to lower interest rates. Most of the time, it involves an inquiry to the bank. Calling customer service can be an excellent first step in lowering the interest rate, but only if your credit and payment history are strong. Without those two things, the conversation won't last very long.
The conversation may need to be aggressive, too. Sometimes a customer service rep will simply say that they are not offering lower rates. Do not accept this answer. The first customer service rep you reach through the automated menu isn't usually the one who can answer this.
Ask for credit card services or the APR department. Tell them your intentions and if that doesn't work, ask to speak to their supervisor. Until you get someone who at least looks at your account activity, you still have hope.
Being a Good Credit Card Customer
Making all of your payments on time for a year or more with a credit card is a great way to ask for your interest rate to be lowered. Especially in today's economy, many people are defaulting on credit cards. If you can show that you've made every payment on time, many companies will lower your interest rate as a reward.
Having excellent credit is also a way to show that you are a good customer. If your credit score has gone up since you were first issued the card, then you have every right to ask customer service to lower your interest rate.
Talk It Out
If your call to customer service isn't going so well, you can make suggestions to them that will make them think twice about rejecting your request.
- Let them know you are considering cancelling the card and going to another card company that has a lower APR.
- Negotiate. If they can't lower the APR, will they remove the annual fee if there is one?
- Ask them how you can lower the APR. Maybe they can recommend certain things you can do to turn their no today into a yes in a few months.
Shopping around for new credit cards is the best way to guarantee a low rate. Some give a great introductory rate that can be very enticing, but the fine print will make you think otherwise. Some will only offer a halfway decent rate no matter what. Research what cards are out there and way the perks they offer with the interest rates.
Know what a good APR is -- 20% is high, 30% is outrageous, 5% is almost unheard of. Be realistic in what you want your interest rate to be, but don't be taken for a fool, either. You shouldn't even apply for a card if they are offering a 30% APR. Many store cards have this as their APR, so read the fine print before agreeing when the friendly cashier offers to save you 10% on today's purchases. Think about it. That's $30 that you'll pay in interest for $100 worth of stuff. That's just crazy!
Sure, they may offer airline miles, but at what expense? Many of the credit card companies who offer great perks also have high APRs. A sure way to lower an interest rate on a credit card is to ditch the one with options for a basic credit card without all the fancy stuff..
The better a credit score is, the better chance of getting a lower interest rate. If you started with a high APR, there is nothing wrong with making an inquiry to lower it, especially if your credit score has improved since first getting the card.
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