Editorial Policy

4 Easy Ways to Lower Your Credit Card Interest

default author image

By Eva Norlyk Smith, Ph.D.
May 22, 2009

If you carry a credit card debt of more than $5,000 forward from month to month on high interest credit cards, you can save big by finding ways to lower your interest rates. Not sure how to do it? Here are 4 tips to lower your credit card interest rates.

Tip # 1. Lower Your Interest With a Credit Card Transfer

If you have credit cards without a balance, look into doing a credit card transfer to shift balances to low interest offers. Most credit card issuers have standing balance transfers offers with a low APR to card holders in good standing and with good credit rating. Taking advantage of these balance transfers offers is an easy way to lower the interest rate on your existing credit card balances.

You may not be able to get a 0% APR balance transfer offer, but even a 6.99% credit card transfer can be worth it, if your regular APR is 19.99%.

Tip #2. Negotiate a Lower Interest Rate

Call your credit card issuer to negotiate a lower interest rate on your credit cards. It’s not as impossible as you might think. Surveys have shown that more than half of consumers who call their credit card issuer to complain about high APR got their interest rates reduced by an average of one third.

As more consumers are having trouble making ends meet, card issuers are becoming more flexible. It is in their interest to work out terms that will prevent their card holders from defaulting on outstanding credit card balances.

Indicate that you’re considering transferring your balance to a low interest credit card, but want to compare the rate to their best interest rate first. This option works best for people with a good credit rating, but irrespective of your credit score, it’s worth a try.

Tip #3: Get a Low Interest Credit Card

Credit card issuers want your business, so sometimes you get the best deal simply by applying for a new, low interest credit card. Once approved, transfer high-interest credit card balances to the low interest card. Most low interest credit cards also come with a 0% APR introductory offer for the first six or twelve months, which will add to your savings.

Only pursue this option if your credit rating is good. Each time you apply for a low interest credit card, your credit report gets pulled, so only use this option if you have good credit, if it’s been at least six months since your credit report was last pulled, and if you don’t plan on applying for a major loan, such as a mortgage or car loan, in the near future.

Tip #4: Increase Your Credit Score to Lower Your Credit Card Interest

If none of the above options work for you, it might be that your credit score is too low to qualify for low interest credit card rates. In that case, even though it will take some time to see results, your best option is to take steps to improve your credit rating.

And it may not take as long as you think. According to the credit rating agency Experian, 30% of U.S. consumers improved their credit score by up to 50 points within a six-month period, from January to June 2007. That 50-point increase can translate into lower credit card interest rates and in turn mean significant long-term savings.

Quick Tip. Low interest rates on your credit cards will not just provide you with great savings, it will also lower the minimum monthly payments due. For the biggest savings, use that extra money to pay down your credit card faster.