The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
You can lower your credit card interest rate by following good credit habits and having a solid history of on-time payments, researching how your current interest rate stacks up against competing credit card companies’ offers and calling your credit card issuers to negotiate a lower interest rate and explain why you deserve it.
As an educated consumer and a responsible borrower, you may be wondering how you can lower your hefty credit card interest rates. After all, a few years have probably passed since you first applied, and perhaps your credit has improved since then. Luckily, it’s very possible to score a reduced rate by following these steps:
- Work to improve your chances of getting approved by following good credit habits and ensuring you have a solid history of on-time payments.
- Research your current interest rate and how it stacks up to what competing credit card companies are offering.
- Call your credit card issuers to negotiate a lower interest rate, explaining why you deserve it.
- If you’re rejected, try again and ask to speak to a different person, or consider alternative options.
Table of contents:
- 1. Improve your chances of getting approved
- 2. Do the research
- 3. Ask your credit card issuers
- 4. Consider alternative options
- Long-term benefits of a lower credit card interest rate
- Your first step to credit repair
1. Improve your chances of getting approved
Since interest charges are a big moneymaker for credit card issuers, a reduced rate is a big ask. Credit card companies will likely only be willing to bend for their best customers, so you’ll first want to do everything you can to set yourself up for success.
This means ensuring your credit is in tip-top shape—specifically, a “good” FICO rating or better. Aim for a FICO® score of at least 670 before you ask for an interest rate reduction, although you may want to aim for 740 to bump yourself up to the “very good” bracket.
You’ll also want to ensure you have a reliable history of on-time payments. If you’ve had a shaky history of missed or late payments, you may want to focus on making on-time payments for a year before you ask for a reduced interest rate.
Another indication of a solid credit card customer is someone who is willing to pay down their balances and reduce their debt even before asking for a rate reduction. Lower debt levels may indicate better financial standing, which could improve a person’s negotiating power.
If you’re planning to ask for a reduction in your interest rate, it’s wise to try to avoid applying for new lines of credit. As you may already know, credit inquiries can negatively impact your credit. Opening new credit cards or applying for more loans may negatively affect your negotiating power and ability to qualify for a rate reduction.
Improving your credit standing, especially if you’ve previously struggled with negative items, is a process that takes time. Rather than looking for a quick-fix solution, focus on building good credit habits such as the following:
- Setting payment reminders so you remember to pay credit card bills on time.
- Avoid opening unnecessary credit accounts.
- Avoid closing old accounts unless you’re sure it won’t affect your credit history.
- Regularly review credit card statements and dispute unauthorized charges.
- Use your credit card rewards wisely (consider using cash back to pay your bill).
- Track and protect your personal information to avoid fraud.
- Check your credit report and file a dispute for any inaccuracies.
2. Do the research
Now that you’ve worked to improve your credit standing, you’ll want to do some research before calling your credit card issuer. First, check what your current interest rate is. You can find this on your monthly credit card statement. How does your rate compare to what’s considered “good”? How does it stack up to rates that competitors are offering?
Determine a good credit card interest rate
As of August 2023, the average credit card APR charged is 20.93 percent. If your interest rate is even a few percentage points below this number, you’re likely working with a good interest rate, and negotiations to go any lower may be unsuccessful.
On the flip side, if your interest rate is substantially higher than average, you may have more wiggle room to negotiate—especially if you’ve improved your financial standing and credit since you first applied.
Look up what competitors are offering
Credit card companies must offer competitive interest rates to stay in business. They know it’s a competitive industry and that losing customers is expensive. If you can find comparable cards with lower interest rates, you can use this as ammunition to negotiate a lower rate.
Look at other available cards and their terms and interest rates. Take note of the card name, credit card company and interest rate. Keep this handy for when it’s time to call your credit card issuer. The more specific you can be, the better.
3. Ask your credit card issuers
Once you’ve researched the competition and worked to improve your chances of getting approved for a lower interest rate, it’s time to begin calling your credit card issuers.
If you have multiple credit cards, call each one of the issuers and consider starting with the card you’ve had the longest. You’ll likely have the most success with the company you have the longest and best track record with.
Alternatively, you could start with the card that carries the highest interest rate. A reduction here could help you save more money, but keep in mind that you may not be able to leverage your long history as a reliable customer.
Start by explaining who you are and why you deserve consideration for an interest rate reduction. Make sure to mention your credit and how many years you’ve been a customer. Consider the following script:
“Hi, my name is ____, and I’ve been a customer since ____. I’ve always made on-time payments, and I have a [good/excellent] credit score of ____. I’m calling because I’d like to lower my interest rate, which is currently ___ percent.”
Do: Research beforehand, have specific numbers and know your worth as a customer.
Don’t: Go into a call unprepared or without knowing exactly what you’re asking for.
Then, explain the reason you want an interest rate reduction. Maybe you’ve recently faced furlough or wage cuts or you need to pay off expensive medical bills. Or maybe you’re just trying to improve your credit and would like to pay down your debt.
Do: Be factual and explain your situation.
Don’t: Be rude, demanding or entitled.
This is also a great time to bring up competitors. If you prepare for the call, you will be aware of competitors and what they’re offering. Be specific—mention other credit card companies and their APR offers, and suggest that if you aren’t able to reach an agreement, you’ll consider taking your business elsewhere for more competitive rates.
Do: Be specific about what other competitors are offering and see if they will match rates.
Don’t: Cancel your card if you don’t get a reduced rate, as this may hurt your credit score.
If you score a lower rate—congratulations! Now move on to the next credit card issuer. If you receive a “no,” or a compromised rate that is still higher than you’d like, consider trying again at another time or when you’ve further improved your credit.
Do: Be diligent about following up or speaking to a supervisor if things aren’t going well.
Don’t: Give up after the first try. Ask for the reasoning behind a “no” so you can change your situation to get the rate you want.
FAQ: Does asking for a lower interest rate affect credit score?
The only way asking for a lower interest rate could hurt your credit score is if it requires the creditor to pull a hard inquiry. Credit card companies may do this to look at your credit report to see if you qualify for a lower interest rate.
A hard inquiry may cause your credit to take a small hit—however, it can only affect your credit score for up to 12 months. That said, if you successfully score a lower interest rate, it may indirectly help increase your credit since paying off your debt will be less costly.
Remember that credit card interest rates aren’t reported to credit bureaus since they don’t directly affect your credit, so a hard inquiry is the only scenario that would temporarily hurt your score.
FAQ: Can I ask again if I get rejected the first time?
Yes. If you did not receive the reduction you’d like or you were simply told “no,” you can try again in a few weeks, especially if you can get a hold of someone else the second time. Unless the creditor has to pull a hard inquiry each time you ask for a rate reduction, you can ask multiple times.
If you plan to call back again, consider doing further research beforehand and offering a reason why you may need a reduced interest rate.
You may choose to adjust your script to something similar to the following:
“Hi, my name is _____, and I’ve been a customer for _____ years. I have been steadily paying my credit card bill and paying down balances since becoming your customer, and I have a good/excellent credit score of ____.
Recently, I’ve run into some financial difficulties [briefly explain difficulties]. And seeing as I’ve been a loyal customer with an excellent track record, I am calling to see if you would reduce my credit card interest rate.
My current rate is ____ percent, but I see that ____ credit card company offers their ____ credit card, which is comparable to mine, at a ____ percent interest rate. Would you be willing to match this rate or offer a lower interest rate, such as ___ percent?”
Remember to be persistent, patient and respectful, as different representatives and supervisors may offer varying outcomes.
4. Consider alternative options
If your credit card issuer won’t budge on your interest rate, it may be time to consider other ways to lower your credit card interest rate. Here are two temporary solutions you may consider while trying to pay down your debt.
Try the balance transfer method
If you’re unhappy with your current interest rate, a balance transfer allows you to transfer your current account balance to a different card with a lower interest rate. You then make payments to your new account, saving money in interest charges.
Keep in mind that balance transfer interest rates, while low, are usually temporary. This means your introductory rate will likely increase after the promotional period is over. Aim to pay off the majority of your debt before this happens to make the most of your balance transfer.
Seek out debt consolidation
With debt consolidation, you can take multiple high-interest credit card balances and combine them into a single loan with a potentially lower interest rate. Just keep an eye out for fees and penalties. Additionally, you’ll want to review the loan terms and restrictions to see if the repayment timeline is suitable for your needs.
Long-term benefits of a lower interest rate
It’s no secret that a lower interest rate is favorable and may offer you some debt relief. It saves you money when you’re paying off credit card debt. However, for those with significant credit card debt, a lower interest rate may also allow you to pay off your debt sooner. This, in turn, saves you more money in interest over time and allows you to see an improvement in your credit and financial standing sooner.
Remember to maintain good credit management even after you’ve scored a lower interest rate and paid down your debt. On-time payments, low credit utilization and a long credit history are all important things to keep in mind.
Your first step to credit repair
Despite good credit management, errors are surprisingly common in credit reports, which can cause your credit to dip for unfair reasons. Learn about how Lexington Law Firm’s credit repair services can help you address these questionable negative items and get you on track for the credit you deserve.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
