Here’s How to Reduce the Interest Rate on Your Credit Cards

Anyone who has ever carried a balance on a credit card knows from experience that the interest eats you alive. If you carry $5,000 on a card with a 30% interest rate, then you’re getting dinged with $125 in interest payments a month until you pay it off. That has a huge impact on people who are struggling to get rid of debt or make ends meet.

The healthiest practice for credit card use is to simply not carry a balance. Pay your cards off in full each month. However, that’s not a strategy most people follow, particularly at the beginning of their financial journey. Many people find themselves carrying balances from month to month, and thus they’re getting hit with those big finance charges.

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There are a number of solutions to this problem. You can seek out some zero interest balance transfer offers, but those usually only handle part of your debt and are dependent on your current credit. You can pay the cards off as fast as possible by scraping every dime you can, but that doesn’t stop the interest flood.

Another method you can use to keep those interest payments under control is to simply request an interest rate reduction from your credit card issuer. If your interest rate is reduced, then you’re suddenly paying less interest on each monthly bill. This is most likely to happen on cards where you aren’t pushed right up to your credit limit and you’re making payments on time.

[ Next: Compounding Interest Works Against You — Here’s How to Beat It ]

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    Why try to reduce credit card interest?

    A simple rate reduction can help a lot. On that $5,000 card above, if you’re able to reduce your interest rate from 30% to 20%, your monthly interest payment drops from $125 to $83 — an immediate savings of $42 per month going forward. That’s money you can instead apply to the balance, paying off that card much faster than before, or it can simply be a little more money to help you make ends meet.

    If that sounds like you — you’re making your payments, but you’re carrying a balance that isn’t too close to the credit limit — you might be able to easily get an interest rate reduction on your credit cards. Here’s how to do it. 

    How to reduce the interest on your credit card

    1. Take out a card on which you’re not carrying a balance

    By carrying a balance I mean you’ve not paid it off entirely and let the balance carry forward for at least a month, earning interest. If you haven’t carried a balance in a while, the chance that they’ll reduce your rate is much lower because you’re not a client that makes them money. Meanwhile, they’re not going to lower your interest rate if they view you as a risk — rather, they’re likely to respond by lowering your credit limit or closing your card.

    [ More: How to Handle Piles of Credit Card Debt ]

    You should do this only with cards with which you have good standing as a customer, which means you’re keeping up with your bills and carrying a balance, but not standing out as a credit risk.

    2. For each of those cards, flip it over and call the number on the back

    When you first call, you won’t be able to get your rate reduced in the automated menus, so navigate the menus until you are actually speaking to a customer service representative. 

    Just wait until you hear the option to speak to a customer service representative and choose that option, or if you don’t hear that option, choose the one that’s most similar to requesting an interest rate reduction.

    3. Have a polite conversation with the customer service representative

    It is very likely that the first person you speak to, and perhaps even the first two people, cannot make those changes. This is normal — most of the customer service people you initially speak to can only answer questions and make very minor changes to your account. It is often their supervisor who can make more meaningful changes, like altering your interest rate. So, what can you do?

    [ Read: Don’t Get a Store Credit Card — Even Just For the Bonus ]

    When you’re actually talking to the customer service representative, be polite and request an interest rate reduction. You’ll quickly learn whether the customer service representative can make that change for you. If they’re not able to do so, politely ask to be transferred to someone on their team who can make that change.

    4. Ask for the rate reduction

    Make it clear that you are looking at options to make your debt load easier to manage, and that reducing your interest rate on this card means that you are more likely to stick with it and less likely to consider a balance transfer to another card.

    The person you’re speaking to may or may not be willing to reduce your interest rate, depending on company policy at the moment. If they’re not able to do so, it’s usually because of a policy set by someone in the corporate hierarchy above them. Instead, ask if you can speak to someone who can make the change, and if there is no such person available, ask what they can do to help you easily make your monthly payments without accumulating additional interest. They may be able to provide other options.

    5. Be polite, calm and thankful throughout the call

    No matter what happens on the call, be polite and calm. Do not get angry or frustrated. The person you are speaking to very rarely has anything to do with the policy of the company as a whole. Likely, they’re very restricted in what they actually can do.

    The best thing you can do to enhance your chances of actually getting a rate reduction is to be polite and kind, even if they say they can’t do this. Just ask if there is someone who can make that change.

    Customer service representatives have to deal with angry and belligerent customers all the time. Anger over the phone does not magically make them more able to help you or more likely to want to help. It makes them want to end the call. If you want to maximize your chances for help, stay polite and calm throughout the call.

    6. Rinse and repeat for your other cards

    This technique works well for all cards you have on which you’ve carried a balance recently and have maintained a good payment history without going over your credit limit. Some card issuers will happily lower your interest rate, while others will not, but every interest rate reduction will be a big help on your path to getting a better handle on your debt.

    We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

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    Trent Hamm

    Founder of The Simple Dollar

    Trent Hamm founded The Simple Dollar in 2006 after developing innovative financial strategies to get out of debt. Since then, he’s written three books (published by Simon & Schuster and Financial Times Press), contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.

    Reviewed by

    • Courtney Mihocik
      Courtney Mihocik
      Finance Editor

      Courtney Mihocik is an editor at The Simple Dollar who specializes in insurance, personal finance, and loans. Previously, she wrote and edited for Interest.com, PersonalLoans.org, Ballantyne Magazine, Thread Magazine, The Post, ACRN, The New Political, Columbus Alive and the Institute for International Journalism.