By David Pilley on September 26, 2011
.jpg.aspx?width=75&height=75) Whenever you get a credit card, the two numbers you might get most intimate with are your balance and monthly payment. At some point, these numbers might get out of hand. You might take a look at your statement and wonder, “How can I get a lower payment?” Well, there is no surefire way to lower your monthly payment, but you may have some luck in lowering or even eliminating some of the fees.
If you’ve have a credit card for a while, you should be aware of the variable interest rate. Rates are rarely ever fixed on a credit card, and they adjust according to the prime rate. According to the Wall Street Journal, the current US prime rate is 3.25%, and credit card companies will usually add at least ten to the prime rate to determine their own rates. It is important to know that the prime rate is an index, not a law (traditionally, the prime rate is an average of the interest rates of 30 large banks), so the ten percentage points is really just a ballpark estimate, as some credit card companies may be higher.
Since you now know the prime rate is just an index, you can use this to your advantage because most everything else in the credit world is an index. If you have good credit scores from the three major credit companies (a score of at least 620 is usually deemed good), and you have also been current on your credit card’s monthly payments for a while, you may be able to ask the company for a lower interest rate.
How do you ask? Well, it might take just a simple phone call to the credit company. Let the customer service rep know that you have had the account for a while (the longer the better, especially if you have never been late with payments), and simply ask if you can get a lower rate. The most you’ll likely get in one sitting is a one percent decrease (not much, but better than nothing), and if you are unsuccessful, you can try again in another six months, or you can write a letter to the company about your situation.
Lowering the interest rate may be one possible target, but you can also keep an eye on other fees. You may have something called an annual fee, where you pay once a year simply for having the account. You can call your credit card company and ask to have it removed. The only time you should consider trying to lower the balance (aka debt negotiation) is if you have been late on multiple monthly payments and you are on the verge of bankruptcy. If you have multiple credit cards, you might be able to consolidate them into one account with a lower interest rate. While there may be a low introductory rate, the rate will eventually go back up. If anything, you should pay more than the minimum on your monthly payments so you can ultimately pay less in interest.
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