Can I lower my credit card interest rate-Is it even possible
Credit cards are such a part of our every day lives that we forget how to live without them. We always seem to get this question from our clients, can I lower my credit card interest rate? . It is not as easy of a question to answer than one would think because the banks are greedy. If you so much as sneeze in the wrong direction your rate will likely start to increase.
Banks will have you believe their is nothing they can do to help you and that your rates cannot be lowered. We will discover below things you can do soften the blow of your interest rate some with the banks help and some on your own.
What can I do to help my credit
Since your credit history is how they judge your credit worth then we need to start their. Here are a few things right off the bat that you need to start doing :
- Pay at least your minimum payment on all yours accounts on time or even better ahead
- Get the balances on all your cards below the 40% threshold
- Resist the temptation to use the cards at least for the time being ( Hide them if necessary)
This will do two things for you, helps show stellar payment history and reduce your debt to income ratio. Both of these will start helping your credit slowly but in the plus direction. This alone will not likely make them adjust your rate as this just isn’t part of their model. They don’t care and are out to make as much of money as they possibly can and will take it where they can get it.
Should I transfer balances between cards
This is a step that you want to think about carefully. There are a lot of hidden traps that most people don’t think about as part of this process. I will illustrate some of them here :
- You are transferring to a card with an existing balance, even if they give you a special rate it is likely that they are applying all payments to the lowest interest balance first. This means more interest long term because you have an outstanding balance with a higher rate just sitting their collecting month after month.
- If you are transferring to a 0% card it is likely this will be considered new credit which will hit you credit rating. Yes you will be paying no interest IF you can pay it off by the term date, if you don’t you will be hit with all the interest you should have been paying .
These are risky options and you should way them heavily into your payoff plan .
What is the best plan of action to take
Paying your debt down in preparation of requesting a rate reduction may give you the best shot at getting approved. Not a huge shot but certainly better than your accounts showing that you are struggling, this is a dead give away and they will fear at some point you won’t be able to pay anymore.
Here is a process you can follow to help pay your cards down faster and save you a ton of money over the life of your balances. What you have to do is convert each account as follows :
Start with the smallest card you have and Let’s say the minimum payment is $25.00 and due on the 30th. You will want to make this payment ahead of time and as soon as the next month posts make the same $25.00 payment again. You are now effectively ahead 30 days on that account and each month more interest gets chipped away at and more principal gets paid.
This will again help your debt to income ratio and save you future income that you would have been paying on interest. Now that you have done all that you can see if they will help you out a little on your interest. It has been my experience that they will not, even if you threaten to stop paying or go into a debt management scenario.
If all else fails how can I lower my interest rate
So we are down to the last possibility that I have seen actually work and is not talked about to often. What you to do is get cleaver and its not what you ask but how you ask for it. This is likely how your conversation will likely go :
You: I am calling to inquire about getting my interest on my credit card reduced
CC Company: Please hold and let me take a look to see what we can do….PAUSE…. I’m sorry but what you currently have is the best we can provide.
You: OK so do you have any possibilities of upgrading this card to a rewards cards ?
CC Company : Please hold and let me check to see if we have anything available, why yes we actually do have a few rewards cards that we can offer you. BINGO
You: And may ask what is the rate on that card ?
CC Company: It should be the default rate roughly 13/14% depending on the establishment.
Consider that the one time reset you have been waiting for and make sure you too keep it clean, it is not likely you will get that chance a second time.
Now that I have lowered my interest rate what’s next
As you can see if it were up to the banks your interest rates would never go down. They are in the business to make money and you are the vehicle they are using to do so. Do not believe and settle with the first answer you get when calling them, it is ultimately up to you to make it happen.
Following the techniques I have listed above will greatly work towards your advantage if you stick with them. Feel free to comment on anything I have written about today, I look forward to hearing from you all and providing additional content soon