Lower Credit Card Interest Rate

How to Get the Credit Card Company to Lower Your Interest Payments

Jan 13, 2008 L. Marie Dubuque

Convincing a credit card company to lower your interest rate isn't as hard as you might think. Tips on reducing your monthly credit card bill even with late payments.

You’ve missed a payment here and there. The bill was late one month and all of a sudden you’re paying astronomical interest rates. How to lower your payments and start making your credit card work for you.

• Start paying on time. That may sound easier said than done, but if you make late payments or miss them entirely, your interest rate will almost certainly go up. The card issuer begins eyeing you as a credit risk. They want to get as much money out of you before you skip out entirely. If you have trouble remembering to pay your bill, set up automatic payments online. Just remember to allow a few days processing time before the actual due date.
• Negotiate with the credit card company. As soon as you make three consecutive on-time payments, call the 800 number on the back of your card and explain why your interest rate should be lower. If you get nowhere with the representative, ask to speak to a manager. Then in a nice way, explain to the supervisor how you are paying on time, and will continue to pay on time. And if you are a long time customer, remind him/her of your history with the company.
• Work to raise your credit score. The higher your credit score, the better your bargaining position with the card issuer. That means paying ALL your bills on time, especially rent or mortgage payments.
• Pay your entire balance every month. If you don’t, you’ll find yourself in credit card debt very fast. Don’t believe what people tell you about building credit. You don’t need to accumulate debt to obtain a credit history. Simply pay your bills on time and remain gainfully employed. That’s all you need to qualify for a home loan….That and at least a 20 percent down payment.
• Find a credit card that pays you back in cash or gift cards. Stay away from mileage rewards. Instead, use the cash to pay bills or save the gift cards for Christmas presents.
• Transfer your balance to another card. If you are getting nowhere negotiating with your card issuer, shop around for another one. But be careful about credit cards with incredible low introductory rates. Those "teaser" rates are likely to go up very soon. And remember, balance transfer fees could run up to three percent.

Finally, start budgeting. Cut out small expenses and live frugally, at least until you can pay off your credit card completely. When that happens, put the interest you save toward the down payment on a home, or a dream vacation...Just don't finance it with a credit card!