If you carry a balance on your credit card, a high APR can make it tough to pay off your debt. But there are steps you can take to increase your odds of securing a lower rate – even if you have less-than-perfect credit. Here’s how.
If you can’t afford to pay more than $150 a month toward your credit card, for example, a $5,000 balance on a card with a 24% APR could take you nearly five years to pay off and cost you $3,323 in interest.
A larger balance would require an even higher minimum payment. An $8,000 balance, for example, might require you to spend $240 a month just to avoid defaulting. You can calculate how long it would take you to pay credit card debt and how much you’d pay in interest using CreditCards.com’s Credit Card Payoff Calculator.
The higher your APR, the more difficult it could be to pay the bare minimum that’s due.
The best way to avoid this scenario is to lower your credit card interest rate. That may sound daunting. But there are steps you can take to increase your odds of securing a lower rate – even if you have less-than-perfect credit.
See related: How do credit card APRs work?
How to lower your credit card interest rate
5 steps to lower your credit card interest rate
Before you resign yourself to an unaffordable credit card APR, consider your options. You may be surprised by what lenders are willing to offer. For example, CreditCards.com research has found that more than half of cardholders who ask for a lower rate are successful.
Here’s how to do it.
1. Take an inventory of your financial health and credit standing
Your best path forward will depend on your monthly income and budget, your credit score, your total amount of debt and your lender’s credit card policies.
If you haven’t done so already, check your credit score to gauge how lenders view your financial health. Your credit history is critical to determining what options are available to you. So don’t move forward until you know where you stand.
It’s also a good idea to pull a free copy of your credit report from AnnualCreditReport.com. That way, you can check to make sure credit report errors or unauthorized accounts aren’t dragging down your score.
Finally, look over your credit card statements and tally all of your balances. Then check the APRs for each open card. The debt on your highest rate card is the most dangerous to your budget, and so that’s the card APR and balance you should ideally tackle first.
2. Prepare a strong case for why you deserve a lower APR
Depending on your circumstances, you may be able to strike a deal with your lender to lower your APR. However, lenders’ policies vary, and some may be more willing than others to work with you – especially if you have a long relationship and have been a good customer.
Before you try negotiating with your lender, take some time to dig up information that can help persuade them you’re a trustworthy and profitable customer and deserve a better deal.
For example, scribble on a piece of paper your current APR, how often you use the card and how much you typically charge. The more regularly you use your card, the more likely a lender may be to try to work with you. Also note how many years you’ve owned your credit card. If you just recently opened it, a lender may not be willing to lower your rate so soon.
In addition, research other cards and note which ones offer a lower APR. That could come in handy if you want to remind your lender that you can take your business elsewhere. It will also help you avoid hurting your case by requesting an APR that’s way below what others offer.
Finally, look up the U.S. prime rate, which is the benchmark rate that helps set your APR, and subtract it from your APR. That information could help you argue to a lender that the difference between the prime rate and what you’re being charged is too high.
3. Ask about your lender’s financial hardship policy
You don’t necessarily need a good credit score to convince your lender to give you a break. Your credit card issuer may be willing to lower your interest rate – or work out some kind of alternative repayment plan – if you can demonstrate that you are genuinely going through financial hardship.
Check with your lender to see what kind of policies it offers and write down why specifically you are having trouble paying your debt. Lenders don’t want you to default on your loan and so they may be more willing than you think to work out a plan.
You may also want to consider enlisting the help of a nonprofit credit counselor who can help you go over your financial situation and give you some advice for requesting a lower rate.
You can contact a certified credit counselor at:
- NFCC: (800) 388-2227 or NFCC.org
- ACCC: (866) 464-5243 or ConsumerCredit.com
If you’re really having a hard time paying your bills and decide to enter a formal debt management plan, a credit counselor will even negotiate with lenders for you. However, unlike basic credit counseling, this service generally requires a fee.
4. Call your card issuer
Once you’ve gathered enough information to argue your case, call your card issuer and politely ask to speak with a representative about lowering the APR on your card. Make sure you have your notes in front of you and be prepared to bring up your research or additional details about your personal experience if a customer service representative is slow to offer you a better deal. If you get a no, don’t be afraid to call back another time or ask to speak with someone else. A different representative or supervisor may be more receptive.
5. Consider a balance transfer card
If you can’t get your credit card issuer to lower your rate, then it may be time to move on to another lender.
If you have good to excellent credit, you should be able to qualify for a balance transfer card with a low or 0% introductory APR. Be careful, though: Many balance transfer cards charge costly balance transfer fees (usually 3-5%) and high APRs once the promotion is over.
If your credit score is low, you may have trouble qualifying for a top balance transfer card. However, there are some cards that offer promotional balance transfer rates to consumers with lower scores.
See related: What is an intro APR and how does it work?
How to ask for a lower rate
Wait until you have enough time to sit on hold without getting stressed about it. With an efficient customer service representative, your call could last as little as five to 10 minutes. Or, if you’re repeatedly put on hold, it could stretch out as long as 20 minutes or more.
- Get comfortable. Spread out your notes and account information in front of you. And make sure you have something nearby to occupy you if you repeatedly get put on hold. It could be a great time to catch up on the news, finish a Sudoku or scroll through Twitter.
- When you reach a customer service representative, state your name and how long you’ve owned your credit card.
- Then state, as kindly as possible, that you are looking to speak with someone about lowering your credit card APR.
- The customer service rep may forward you to someone else, such as a supervisor, or they may offer to work with you themselves.
- Explain why you feel you deserve a lower APR and try to include as much persuasive detail as you can.
The better prepared you are – with notes about your card usage and positive credit history and other key details – the more persuasive your argument is likely to be to lenders. Also consider stating your desired APR.
If a customer service representative says no, ask why. They may only be allowed to offer you a certain amount, and so it’s also worth asking if there’s anything else they can offer you.
If the representative agrees to lower your rate, ask for written confirmation. And if they don’t agree to help you this time, don’t give up. You can always try again.
Don’t let a steep credit card APR put your financial health at risk. You can ask your lender for a lower rate. Or, if your lender declines to give you a better deal, you can walk away and transfer your debt to a more affordable card.