How to Negotiate a Lower Interest Rate

Negotiate Interest Rate

If your goal is to reduce credit card debt or make your credit less expensive, paying a lower interest rate should be part of your plan. But many people don’t realize that negotiating a lower rate is possible.

Banks and credit card companies won’t voluntarily give you a lower rate. Instead, the original annual percentage rate (APR) you were given will run on auto-pilot unless you speak up.

Before you negotiate, you’ll need to have your ducks in a row. You won’t be in a good bargaining position if you’re drowning in debt or owe late fees for missed payments. You should also check your credit report to make sure there are no outstanding issues or errors. If there are, you may need to talk to a credit expert first to help you fix your credit.

While there’s no guarantee a bank or credit card issuer will give you a lower rate, don’t let that prevent you from trying. If you’re ready to negotiate, here’s a guideline for what to do.

Get competitive

Credit card companies are competing for your business. When you receive a flurry of credit card offers in the mail, it’s because they’ve already pre-qualified you for their products. And to win your business, they know they need to offer competitive rates.

Before you contact your credit card company, do some research. Check around and find a credit card similar to yours that has a better rate. When it’s time to come to the negotiating table, you can use the other company’s terms as leverage.

Pay down your balance

Even if you’ve never missed a payment before and have a solid credit report, carrying a balance on your credit card may make it less likely for your issuer to drop your rate. They may want assurance they’ll get something in return for giving you a break  — namely, more of what you owe.

It’s wise to pay down your existing balance as much as you can before negotiating. That way you can show you’re at a lower risk for maxing out your credit limit. Being able to show responsible spending and low debt is always in your favor.

State your case

When you contact your credit card company, be clear that you’re asking for a lower rate. Start by pointing out your past and current account history with the company. Make sure to mention:

  • Your regular use of the card
  • Your ability to pay what you owe every month without fail
  • Your pristine credit report and good credit score

Then bring up any competitive offers with better rates and ask if they’re able to at least match the other rate.

Don’t give up

It may take a few tries before you speak to a representative or supervisor who will agree to work with you. Sometimes the difference may be in how well — and assertively — you present your case.

Again, credit card companies don’t have to do anything. But just because it didn’t work the first time doesn’t mean it’ll never work.

Consider an alternative

If there’s no budging on their end, there is an alternative: a balance transfer card. This allows you to consolidate other credit card debt onto one card, usually with a lower interest rate and often with a zero percent interest introductory offer.

Especially if you’re trying to reduce debt, this may be a viable way to pay it down quicker by owing low to no interest for the first 12 to 15 months.

Be your own advocate

Sometimes it feels difficult to have to be an advocate for your own financial well-being. It’s easier to sit back and roll with the punches, even when those punches don’t benefit you. But if your credit account is in good standing you have every right to make yourself heard. Getting a better interest rate may feel difficult, but it’s not impossible.

Carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

Posted in Credit Card
Learn how it works

Questions about credit repair?

Chat with an expert: 1-800-255-0263

Facebook Twitter LinkedIn