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This article was last updated Aug 24, 2020. Terms and conditions may have changed. For the most accurate information, please consult the issuer website.
If you’re working hard to become debt-free, high credit card interest rates can make your journey all the more difficult as interest charges can significantly impede your progress.
The good news? You may be able to request a lower interest rate from your bank or credit union, which will allow more of your payments to be applied to your debt principal instead of principal plus interest. However, not all requests are successful, or the interest rate reduction may be just temporary.
There are numerous strategies you can implement for saving on high interest charges. It just boils down to which option is best for your situation.
- Negotiate with your credit card issuer
- Apply for a balance transfer card with an intro 0% APR
- Other options to save on high credit card interest charges
Negotiate with your credit card issuer for a lower APR
Who does this strategy work best for? If you’ve been a reliable customer who’s always paid on time and hasn’t maxed out your credit card limit, your issuer is more likely to consider the request. The longer you’ve been with the financial institution, the better — it’s in the best interest of banks and credit unions to keep their loyal customers happy.
Know you might not get exactly what you are asking for. The issuer might offer a temporary rate reduction rather than a permanent one, for instance. Or the issuer might deny your request for a lower rate entirely. In that case, you’ll need to consider options such as applying for a balance transfer card or taking out a debt consolidation loan instead.
However, a study by CompareCards found that of the one in five cardholders who tried asking their credit card issuer for a lower interest rate, 81% of those who had asked were successful.
“People have way more power than they think they do over their credit card issuer,” said Matt Schulz, chief credit analyst at CompareCards. “If you’re a good customer, card issuers want to keep you around and develop a long-term relationship with you.”
Still, granting your request may be tougher while lenders are being more cautious due to the economic ramifications of the coronavirus.
“Prior to the pandemic, there was an excellent chance they’d work with you,” Schulz said. “Your chances aren’t as good right now, but it’s still worth asking.”
Here are the steps you need to take before you pick up the phone:
1. Prepare competing credit card offers head of time
You may not have paid attention to the credit card prequalification offers you’ve received via email or snail mail, but now’s the time to do so if you want to negotiate a lower interest rate.
“You can use those offers to frame the negotiation,” Schulz said. “For example, you can say, ‘I’ve been a good customer for years and I like my card, but I’ve been offered a different card with a lower rate. Would you be able to match that rate?’”
You can even use an online prequalification tool offered by another card issuer to see what offers pop up. You can take a screenshot of the offer and use it as a negotiating tool.
2. Know the credit card APR you’re looking for
You should know your current APR and the specific APR you want to ask for.
“Don’t just say you want a lower rate, be specific about the exact rate you want,” Schulz said.
If you don’t know your current APR, you can find it on your monthly credit card statement. You should also be able to check the statement to see how much interest you’ve been charged in a billing period, and how much interest you’ve been charged during the calendar year.
Be prepared that when you call, your issuer may offer a permanent lower rate, a temporary lower rate, a promotional 0% APR period, a refund on recent interest charges or deny your request.
3. Make the call
When you call the number on the back of your card, start by asking for the customer service representative’s name and direct line in case you need to call back. Explain that you’re calling to ask for a lower APR on your card, and make your case demonstrating your value as a customer.
If the representative initially tells you there are no offers on your account, this is where you can mention the competing offers you’re considering, and emphasize that you’d rather stay with your current issuer if you can get a lower rate. But just like with anything, the way you approach the negotiation matters.
“The representative on the other end of the phone is a person just like you,” Schulz said. “If you’re too pushy or if you’re rude, you’re much less likely to get your way than if you treat the person politely and with kindness. Now, that doesn’t mean you should be a pushover — just don’t be a jerk.”
At this point, if you’re told there’s nothing that can be done, ask politely to speak to a manager. The representative who first takes your call may not have the authority to grant your request.
If you are successful in negotiating a lower rate, ask to have it confirmed in writing and make sure you understand the fine print. For example, ask if the lower rate applies to both your existing balance and new purchases or just to one or the other.
However, if the call comes to an end with no offers, try calling again with a different customer service representative. If repeated attempts fail, it may be time to consider a new card, a loan or one of the other methods outlined below for reducing your interest rate.
Apply for a balance transfer card with an intro 0% APR
Who does this strategy work best for? You need to have good or excellent credit to qualify for a balance transfer card. Using a balance transfer deal allows you to move debt from a high-interest card to one offering an introductory rate, often 0% APR for 12 to 18 months. There’s typically a 3% to 5% balance transfer fee that is applied to the amount transferred. Note that you can’t move balances between cards from the same issuer.
There is a risk of not being approved for a high-enough credit limit to transfer all of your existing balance. Or, depending on the issuer, there might be a cap on how much you can transfer. In that case, you may wish to transfer as much as you can and pay the remainder down quickly on the high-interest card, or you may decide to take out a loan to cover the rest.
Below are some cards worth considering for lengthy balance transfer offers:
Citi Simplicity® Card
The Citi Simplicity® Card is exactly what its name implies: A simple card with a great introductory period for balance transfers. Here are the details:
Intro balance transfer APR: 0% for 18 months on balance transfers. After, a 14.74% - 24.74% (variable) APR applies.
Balance transfer fee: Balance transfer fee – either $5 or 3% of the amount of each transfer, whichever is greater.
Other card details: There’s a $0 annual fee, and the card has no late fees and no penalty APR.
Discover it® Cash Back
0% for 14 months on purchases and Balance Transfers, then 11.99% - 22.99% Variable APR.
5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, gas stations and when you pay using PayPal, up to the quarterly maximum when you activate, 1% unlimited cash back on all other purchases - automatically*
Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. You could turn $150 cash back into $300.
- INTRO OFFER: Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. You could turn $150 cash back into $300.
- Earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, gas stations and when you pay using PayPal, up to the quarterly maximum when you activate.
- Plus, earn unlimited 1% cash back on all other purchases - automatically.
- Redeem cash back in any amount, any time. Rewards never expire.
- Use your rewards at Amazon.com checkout.
- #1 Most Trusted Credit Card according to Investor’s Business Daily.
- No annual fee.
- Discover is accepted nationwide by 99% of the places that take credit cards.
- See Rates & Fees
See additional details for Discover it® Cash Back
With the Discover it® Cash Back, cardholders get a reasonable intro APR period and great rewards. Here are the details:
Intro balance transfer APR: 0% for 14 months. After, a 11.99% - 22.99% variable apr APR applies.
Balance transfer fee: 3% intro balance transfer fee, up to 5% fee on future balance transfers (see terms)*.
Other card details: 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, gas stations and when you pay using PayPal, up to the quarterly maximum when you activate, 1% unlimited cash back on all other purchases - automatically The annual fee is $0.
Wells Fargo Platinum card
The Wells Fargo Platinum card is a no-frills card with a lengthy intro APR offer on balance transfers, as well as some helpful benefits. Here are the details:
Intro balance transfer APR: 0% intro APR for 18 months on qualifying balance transfers. After, a 16.49%-24.49% (variable) APR applies.
Balance transfer fee: 3% for 120 days from account opening, then up to 5%; min: $5.
Other card details: Benefits include cellphone protection, an auto rental collision damage waiver and roadside dispatch. The annual fee is $0.
Other ways to reduce high interest credit card debt
Debt consolidation loan
Who does this strategy work best for? Consumers who don’t want to open a new credit card or have a credit score too low to get a balance transfer card, or those who may be carrying too much debt to move to a balance transfer card, paying off credit card debt with a loan could be the right move if you qualify for a loan with a lower APR. Plus, a personal loan allows consumers who may have debt spread out across multiple cards to consolidate debt into one loan and only have one monthly payment to deal with.
Credit card hardship program
Who does this strategy work best for? If you’re struggling with finances because of a misfortune outside your control, call up your credit card company and ask about a hardship program. Issuers may work with cardholders to provide temporary relief due to factors such as job loss, medical bills, natural disasters (including pandemics). The specific relief offered will vary by issuer. However, you may be offered a lower interest rate, deferred or reduced payments, waived fees or increased credit limits.
Debt management program
Who does this strategy work best for? People with balances on multiple high-interest credit cards who are struggling to make even minimum payments, or are falling behind on payments, may need to consider a debt management program. These programs are available through nonprofit credit counseling agencies, and are typically available at a low monthly fee. The counselor may be able to negotiate lower interest rates and fees on your debts as well. While in the program, you generally can’t open new credit accounts, and you might have to close your existing credit cards. It typically takes from three to five years to complete a debt management program.
Borrow against the equity in your home
Who does this strategy work best for? Homeowners whose homes are worth more than what’s owed on a mortgage have home equity, and can tap these funds in a variety of ways, including a cash-out refinance, home equity line of credit or home equity loan. However, when leveraging home equity to pay off credit card debt, it’s key to remember that you could lose your home if you default — so proceed with caution and stick to a strict repayment plan. Home equity loan and refinance rates are currently much lower than credit card APRs, allowing you to reap substantial savings if you choose to go this route.
The information related to the Citi Simplicity® Card has been independently collected by CompareCards and has not been reviewed or provided by the issuer of this card prior to publication.