How to lower your credit card interest rate

If you have a balance on your credit card, a high APR can make it difficult to pay off your debt, especially if a limited budget prevents you from increasing your monthly payments.

If you can’t afford to pay more than $150 a month on a credit card, for example, a $5,000 balance on a card with a 24 percent annual interest rate could take you almost five years to pay off and cost you $3,323 in interest.

A larger balance will require an even higher minimum payment. For example, a $8,000 balance might require you to spend $240 a month just to avoid default. You can calculate how long it will take you to pay off your credit card debt and how much you will pay in interest using the CreditCards.com payment calculator.

The average credit card interest rate is just over 16 percent. However, some low-interest credit cards advertise minimum annual interest rates of just under 12 percent and, more rarely, below 10 percent. The higher your APR, the harder it can be to pay the minimum due.

The best way to avoid this scenario is to lower your credit card interest rate. This may sound intimidating. But there are steps you can take to increase your chances of getting a lower rate, even if you don’t have perfect credit.

1. Take inventory of your financial health and creditworthiness.

Your best path forward will depend on your monthly income and budget, your credit score, your total debt, and your lender’s credit card policy.

If you haven’t already, check your credit score to see how lenders rate your financial condition. Your credit history is critical in determining what options are available to you, so don’t move forward until you know where you are.

Many issuers offer free credit points. And some, like Discover and Capital One, don’t even require you to be a customer to get one.

It is also recommended that you obtain a free copy of your credit report from AnnualCreditReport.com. This way you can check for credit report errors or unauthorized accounts that could lower your score.

Finally, review your credit card statements and add up all your balances. Then check the APR for each open card. Your card debt with the highest rate is the most damaging to your budget, so it’s the APR and card balance that you should ideally decide first.

2. Prepare a compelling case for why you deserve a lower annual interest rate.

Depending on your circumstances, you may be able to negotiate a deal with your lender to lower your APR. However, lenders’ policies vary and some may be more willing to work with you than others, especially if you’ve been in a long-term relationship and have been a good client.

Before you try to negotiate with your lender, spend some time looking for information that can help convince them that you are a reliable and profitable client who deserves a better deal.

For example, write down your current annual income, how often you use the card, and how much you usually charge. The more often you use your card, the more likely it is that a lender will try to work with you. Also, note how many years you have owned your credit card. If you’ve just opened it, the lender may not want to lower your rate so soon.

Also, look at other cards and note which ones offer lower APRs. This can come in handy if you want to remind your lender that you can run your business elsewhere. It will also help you not hurt your business by asking for an annual interest rate that is much lower than what others offer.

Finally, find the US base rate—the benchmark rate that helps set your APR—and subtract that from your APR. This information can help you prove to the lender that the difference between the basic rate and what you pay is too big.

3. Ask about your lender’s financial hardship policy

You don’t necessarily need a good credit score to convince your lender to give you a break. Your issuer may want to lower your interest rate or develop some sort of alternative repayment plan if you can demonstrate that you are indeed experiencing financial hardship, possibly due to job loss or health problems.

Check with your lender to find out what policies they offer. Lenders don’t want you to default on your loan, so they may be more inclined to develop a plan than you think.

You may also consider seeking help from a non-profit loan counselor who can help you sort out your financial situation and give you some tips on how to request a lower rate.

You can contact a certified loan counselor at:

If you are having a really hard time paying your bills and have decided to put in place a formal debt management plan, a loan counselor will even negotiate with creditors for you. However, unlike basic credit counseling, this service usually requires a fee.

4. Call the card issuer

Once you’ve gathered enough information to make your case, call your card issuer and politely ask to speak with a representative about reducing your card’s APR. Make sure you have your notes in front of you and be ready to share your research or additional details about your personal experience if this rep is in no rush to offer you a better deal. If you get rejected, don’t be afraid to call back another time or ask to speak to someone else. Another representative or leader may be more receptive.

5. Consider a balance transfer card

If you can’t get your credit card issuer to lower your rate, it might be time to switch to another lender.

If you have good or excellent credit, you should be able to qualify for a balance transfer card with a low or no starting annual interest rate. However, be careful: many balance transfer cards charge expensive balance transfer fees (usually 3 to 5 percent) and high interest rates after the promotion ends.

If your credit score is low, you may have trouble getting a credit card with a maximum balance. However, there are some cards that offer promotional balance transfer rates for consumers with lower scores.

bottom line

Don’t let a steep annual credit card put your financial health at risk. You can ask the lender to lower your interest rate.

The better prepared you are — with your card usage notes, positive credit history, and other key details — the more convincing your argument will be to lenders. If you managed to get a lower rate, be sure to get written confirmation of this.

Also, remember that if the lender doesn’t agree to help you this time, you can always try again. Or, if your creditor refuses to offer you a better deal, you can walk away and transfer your debt to a more affordable card.