How to Earn Lower Interest Rates |
By Kenneth Long on January 20, 2010 (updated August 18, 2010)
.jpg.aspx?width=75&height=75) Believe it or not, you must earn lower interest rates through responsible financial behavior. To earn lower rates, you first need to know what lower rates you deserve based on your creditworthiness and financial status. To improve your prospects, you might need to make some changes to your financial habits so that you can earn better rates. Finally, you need to know how to follow through so that you can take advantage of those lower rates.
Here are those steps to earning lower rates on credit cards. Of course, if you are having difficulties making your payments, you might need to consider getting extra help, since these instructions are for those with surplus income.
- First, you need to determine your credit scores. If your scores are below 650, then you will experience some difficulty in receiving lower interest rates. For scores over 700, you are deserving of low rates, with the best rates available if your scores are 760 or higher.
- Second, determine how much surplus income you have each month. Make substantial overpayments on any single credit card where you are currently paying a high rate of interest. Doing so is a demonstration of your financial strength, and repeating this process for at least 3 months proves that you have the financial ability to pay down debt rapidly.
- Third, contact your credit card company directly to request the lower rate. Be armed with any preapproved credit card solicitations to cite better offers by their competitors. Tell them that you intend to transfer the balance unless they reward your activities by lowering your interest rate.
If you are successful in getting a rate reduction, you should continue overpaying on that account just as you have done so that you can request another reduction in a few months. You should follow these steps until your rate is reduced to the lowest available rate as published at Bankrate.com. Alternatively, if you have other cards that also carry a balance, then you might next shift your focus toward making overpayments on one of those so that you can then request a lower rate.
Paying down your debt rapidly while meeting all monthly payments on-time will improve your credit scores and allow you to benefit from lower borrowing costs. Not only will you become eligible for lower credit card interest rates, you will also find that other lenders will also consider you for their lowest rates. This could save you thousands of dollars on your next home or vehicle purchase.
Please note that having a financial surplus gives you many options for proving financial strength so that you can earn lower rates. If you are having financial difficulty, then there are other steps that you may need to consider. These can include hardships, debt management programs or more extreme solutions available through legal proceedings. For more information, speak with an Accredited Financial Counselor about your options. |
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