How to Reduce Interest Rates on Credit Card Debt

High interest rates on credit cards are a reality for many consumers who have been late on even a single payment, had promotional rates expire or had the card issuer raise the rate as part of a standard account review. Higher interest rates make it more difficult to pay down credit card balances. Fortunately, these high default rates or notices of interest rate hikes do not have to be accepted.

Instructions

1

Ask. Sometimes, obtaining a lower interest rate is just a phone call away. Every credit card issuer posts its customer service toll-free number on the back of the card. Simply call up and ask for a lower interest rate. Credit card issuers need your business and often have customer-retention programs that reduce interest rates upon request.

2

Negotiate. If your request to lower your interest rates is turned down, start negotiating with your credit card issuer. Focus particularly on card accounts where you are in good standing and have a history of good credit management. You will want to focus on your long history of being a good customer. Take note of card offers with low promotional interest rates that you receive in the mail --- it is best to have an actual offer in your hand so you can be specific with details. You can offer to transfer balances from your other cards or even threaten to close the account.

3

Transfer balances. Another option is to research credit cards offering introductory balance-transfer offers or low fixed interest rates for new customers. Identify the cards that make sense and transfer your existing, higher interest-rate balances to these new cards, provided you can get approved. Some credit cards, especially ones geared toward people with less than stellar credit, may assess annual or transaction fees. However, these upfront fees may be well worth it if there will be interest savings from getting the lower rate.

4

Take out a new loan. Consider applying for a debt consolidation loan, using a peer-to-peer lending network or even borrowing from family members. Any of these approaches should combine all of your credit card debt into a single loan with a single monthly payment, and they almost always come with rates lower than what you are currently paying. Peer-to-peer lending networks may be an option, as you can set your own interest rate and then pool small amounts of loans from individuals all over the world.

5

Get credit counseling. A credit counseling program almost always obtains significantly lower rates for the credit cards you put on the plan. If your interest rates and balances are so high that your finances are unmanageable, a program like this could help you reclaim control of your finances.