High interest rates on your credit card can push you to having a low financial point. Especially when it involves paying hundreds of dollars a month. The money is definitely enormous and will also be an obstacle with regards to building up a savings account. But then there are methods you can use to lower your credit card interests. All you have to do is get your information together, call the credit card company, and be willing to play a little hardball on the phone, and you’ll often get a nice reduction in your interest rate. That will directly help your bottom line.
The money you will save from this will be able to make a difference in your budget if further used properly to enhance a financial turnaround. It can be the foundation of an emergency fund, light a fire under a debt repayment plan, repay a family member for a debt, and countless other little things that can make all the difference when you’re trying to turn your finances around.
Steps to Lower Your Credit Card Interest Rates
The Balance Transfer Option
If your credit card company doesn’t offer lower interest rates on credit card, then you can opt for balance transfers. You may be able to quickly get your rates to 0% for a period of time by signing up for a balance transfer credit card with a great introductory offer. There are so many balance transfers offer in the market, you can be able to even secure 0% introductory APR and purchase for the first 15 months, but then you should be able to pay the balance transfer fee an approximate of 3% of the privilege amount. If you have a credit card balance you could feasibly pay off during that time frame, transferring the balance to a 0% introductory APR card like this one could save you money on interest while simultaneously helping you pay down debt faster. Of course, you need to be able to qualify for another credit card to do this. If you can, this may be your quickest and most pain free option to reduce your interest charges.
Make Sure This Is for You
If you think about negotiating on interest rates on your credit cards, it’s good to make sure that you do qualify for this. So that you avoid wasting your time.
This method works best if you have a huge amount of debts with regards to credit cards and you have so far been able to make your payments till now. A few payments are exceptions but not to the point where collection agencies are after you. Then negotiating with your credit company won’t help at all. Another thing is when your credit card doesn’t carry any balance or has not carried any balance for quite some time, this will make your credit company loose interest in helping you out because as a customer you are not putting much into their office. There embraces this tactic only if you have a leverage you can use (currently paying your finance charges and threaten to move to move in to another account)
The next thing to look at is your current interest rate. This method works if your credit card rate is above 13% but then if you already have a rate that is around 7.99% then your credit card company cannot be able to do much.
Interest rate reduction will only help you if you have a carrying balance, if you have a higher balance you save more.
Prepare for the Call
Before you make the call to your credit card company it’s good to make sure that you are well prepared for this. The below tips are important:
- First, have a copy of your most recent statement with you. Make sure you know what your current interest rate is and also have your account number handy and easy to read. The statement should also provide you with the phone number you need to call.
- Collect any other offers you might have available to you. See if you have any zero interest or low interest balance transfer offers available to you – in short log on to your online access for your credit card and see what’s available. Get a quote on a personal loan from your local credit union’s website. These will be used as leverage to get your rate reduced.
- Figure out a target rate to shoot for on the phone. I recommend shooting for 9.9%, but you’ll likely not get a rate that low.
- Finally, get in the right mindset. Drink a glass of water. Get yourself calm (because getting worked up on the phone won’t help you), yet motivated to make this work. Then pick up the phone and dial.
Make the Call
The first thing you need to do is get someone on the phone that actually has the authority to change your interest rate. Likely, the first customer service representative that you speak to won’t be able to do that. This will not only save you time but it will also avoid you hitting many dead ends with the whole process. So, start off by navigating through their menu until you can speak to a representative. Ask the customer care representative if they have the authority to change your credit cards interests, if they can’t then it would be great to ask them to connect you to someone who can, a supervisor maybe. Once you’ve got a person on the phone who has the authority to change your rates, make your case as clearly and succinctly as possible. The typical response is a reduction in rate, but not a reduction all the way down to the rate you requested. Regardless of what you get out of the call, be polite. Say “thank you” for any rate reduction and don’t get enraged if you don’t immediately get a big reduction.
Sometimes, you’ll get a rate reduction that makes you happy. At other times, you may not get much of a rate reduction at all – and in that case, you’ll want to do something else. So what are the options do you have when you don’t get the reduction but you still want to save some money. Here are some options.
- Seek out balance transfer offers. Moving your balance to another card can help get the finance charge monkey off your back – a useful short term solution. If your credit card company doesn’t offer lower interest rates on credit card, then you can opt for balance transfers. You may be able to quickly get your rates to 0% for a period of time by signing up for a balance transfer credit card with a great introductory offer.
- Seek out another type of debt. Investigate getting a personal loan at your local credit union. A home equity loan is a possibility, but it’s generally a poor idea to change unsecured debt (like your credit card) to secured debt (like a home equity loan).
- Lower the offending debt rapidly. Focus all your energies on getting rid of that high interest debt as fast as you can. You might want to work a second job, sell some stuff, or start a side business to generate extra money – and learning how to live cheaper is always a big plus.
For most people with credit card debt, the possibility of success (and the savings that go along with it) with attempting to get your rate reduced is worth the effort involved in picking up the phone and doing it.