How to Lower Your Credit Card Interest Rate |
By Frank Jones on June 21, 2011
.jpg.aspx?width=75&height=75) There are many ways to lower your credit card interest rate, the most effective of which will need a little work on your part. The first two options I outline here, Credit Score and Transfer, are long-term solutions which will lower your credit card interest rates over the time span of a year or more. The latter two options involve negotiating your debt with your creditor to achieve lower interest rates on your credit cards. Although this may seem like a daunting task, it is better for you to negotiate with your creditor than hiring a debt negotiation service.
Credit Score
Your credit score is a measure of the risk involved in lending you money. This number is determined by your past debt, current debt, payment history, and a few other factors we wont discuss here. Unfortunately, there isn't anything you can do about your past debt, but you can cut or eliminate your current debt to begin to repair your credit score. As your credit score increases you will become eligible for lower interest rates. Additionally, as you pay off your current debt you will begin to build a positive payment history and your credit score will rise. Although this is not a quick fix to lower your credit card interest rate, it is a good long-term approach to the problem and you will qualify for lower interest rates on other loans as well.
Transfer
While transferring debt may seem like a quick way to lower your credit card interest rate by moving your debt from a high-interest card to a low-interest card, it can take a while to get ahead of the transfer fees. Many cards offer low- or no-interest introductory rates as well as special rate periods for balance transfers. However, these are typically associated with transfer fees that can make the offer less appealing for low balances and quick payoffs. Although, if you have enough debt on your credit cards and your repayment plan is spread over a year or more than balance transfers may be a great way for you to lower the interest rate on your credit card.
Negotiate Your Debt
Negotiating your debt is another great way to lower your credit card interest rates if you find that you are falling behind on your bills. At a minimum, this can simply involve calling your credit card company and requesting a lower interest rate, the removal of annual fees, or other adjustments in the terms associated with your card. Beyond these negotiations you could also ask for a debt settlement offer, but that would negatively impact your credit score. Annual fees can often add up to more than the interest rate on your card, so focusing the negotiation on your interest rates and fees can cut your bills over time and help you pay off your credit cards faster. If you don't feel comfortable dealing with this over the phone then you may consider using form letters, some of which are specifically designed to ask for a lower interest rate on your credit card.
Debt Negotiation Services
Although there are debt negotiation services making promises to reduce your debt with little effort, you should remember the old adage - “If it sounds too good to be true, it probably is.” In the case of debt negotiation services this old saying still rings true. There is little if anything that a debt negotiation service can do which you could not do on your own, and without the high fees charged by many of them. Additionally, many creditors refuse to work with debt negotiation services and prefer to deal directly with debtors. For this reason you are always better off negotiating your own debt while seeking the advice of trusted financial experts and non-profit organizations in your community.
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