Why You Should Negotiate Your Credit Card Interest Rates (And How To Do It)

For many people, high credit card interest rates translates to a deadly debt spiral. But moving to a lower interest rate can make all the difference — a quicker path out of debt, a better credit score and power over your own financial destiny.

Unfortunately, most people mistakenly believe that the interest rate they’ve got is completely out of their control. But your rate is actually negotiable. In fact, you may be able to knock down your credit card interest rates with a simple conversation.

Does Your Interest Rate Really Matter?

Here’s the ideal: Let’s say that, unlike many Americans, you have zero existing credit card debt. And, on top of that, you pay off your entire card’s balance each and every month in full. Plus, you have enough money in reserve you’ll probably never need to start carrying a balance on your cards — even if financial disaster strikes.

If you can confidently check all of these boxes, congratulations! Your interest rate doesn’t actually matter, because you’ll never need to worry about paying interest on your credit cards.

Now here’s the reality: Most people fall far short of the perfect financial scenario. They already have credit card debt that’s costing them money. Or they’re on the brink of needing to tap those funds if an unanticipated expense pops up. If you’re still near the beginning of your journey to Financial Freedom, you likely land squarely in this group of people.

So, if that’s you, you’d better believe your interest rate matters a lot. After all, a major part of your existing monthly costs is the interest you owe to your creditors. And the amount of that interest is directly dependent on your interest rate.

Moreover, the more interest you’re paying to mega-corporations, the less money you get to keep for yourself. And that means that you are earning less interest for yourself and your future.

You Have More Power Than You Realize

Here’s a well-kept secret: Your interest rate isn’t actually set in stone. You may think that you’re powerless to change your interest rate — that the size of that number is entirely up to your creditors. But the reality is surprisingly different.

In many cases, you can negotiate your credit card’s interest rate. The credit card industry is cut-throat competitive, so it’s likely creditors will compete to keep your business.

And that’s major news for your financial journey! After all, on average, Americans face massive interest rates on credit cards — just over 17%. But your rates can easily be significantly greater. Consider, for instance, a card offered by First Premier Bank in 2011 that came with an insane 79.9% APR!

And swapping a high interest rate for a lower one can mean all the difference in your life — smaller debt payments owed each month, less time spent in debt and more time to invest and reap the benefits of compound interest that works in your favor.

How To Negotiate Your Credit Card Interest Rates

There is zero downside when you attempt to negotiate your credit card’s interest rate. (After all, the worst that can happen is that you get a hard “no” for your efforts.) So it pays to have the conversation. Here’s how:

  1. Pick up the phone. You’ll want to talk with a real person and not simply send an electronic request into the black hole of cyberspace. Get in touch with the customer service center for your credit card.
  2. Get the right person. Ask to speak with a representative who has the authority to hear you out and make changes to your existing APR.
  3. Make a compelling pitch for lowering your rate. Point to your long tenure as a customer, your great payment history and any competing offers for your business. If other companies are willing to give you a better deal, your existing card may be willing to match their proposed interest rate.
  4. Be persistent but polite. Manners matter. Treat the representative on the phone with respect and be friendly. If you get turned down anyway, ask to speak with someone further up the chain or call back later and try your luck with a different card rep.

If you strike out with one or more of your creditors when it comes to lowering your interest rate, take heart. There’s nothing preventing you from trying again when you have a more compelling case to present. Maybe you’ll get a firm offer from a competing creditor that you can use to persuade your existing card issuer. Or maybe your hard work on improving your own credit history will transform you into a more appealing customer.

When you do negotiate your way to a better interest rate, you will have taken a major step in eliminating your debt. And you will be that much closer to financial independence and a security that no one can take away from you.



image credit: Bigstock/Dean Drobot

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