How to Keep Your Interest Rate Down on Your Credit Cards

Written by: Valencia Higuera

The average credit card has an interest rate between 0% and 20%, and since interest has a direct impact on how much you pay monthly, you might do whatever it takes to obtain the lowest rate. If you rarely pull out your credit cards or pay your balance in full each month, you might pay little attention to your rate. But if you carry a balance from month-to-month, keeping interest rates down on your credit cards can save you money each month.

Improve your credit history.

A positive credit history not only determines whether you qualify for a credit card, but also the interest rate on the credit card. It is normal for someone with a high credit score to obtain the best rate. In this case, a positive credit history and high score may qualify an applicant for 0% interest, or another rate under 10%. Pay down your existing balances and pay all creditors on time. Once you’ve raised your score, contact your credit card company and request a lower interest rate. If you credit history is satisfactory, the credit card company may approve your request.

Transfer your balances.

Maybe you have a high credit score and a good payment history, but can’t convince your creditor to lower your rate. To keep the interest rate down on your credit card, consider a balance transfer. Research and compare other credit cards. Depending on your credit, you may qualify for 0% interest on balance transfers and new purchases for the first 12 to 15 months.

Avoid major delinquencies.

A credit card company cannot increase your interest rate on previous purchases after one late or missed payment. But if you’re more than 60 days behind on a payment, they can legally increase your rate on previous purchases. To keep your credit card rate down, contact your credit card company if you experience payment problems. The creditor may temporarily suspend your payments to keep your account in good standing, or lower your minimum monthly payment to an affordable amount. Do not skip a payment. Creditors are more likely to help if your account is current.

Threaten to cancel your credit card.

Credit card companies have the freedom to increase your interest rate on new purchases at any time. In this case, the creditor must give a 45 day notice. However, you can fight this increase. If you’re a long time customer and have a good payment record with the creditor, contact the company and ask to maintain your current rate. You can threaten to pay your balance off and cancel the credit card. To retain your business, the creditor may comply with your request, but this isn’t a guarantee.

Think twice before threatening to cancel your credit card. Ideally, you don’t want to cancel an older account because this can shorten the length of your credit history. But if this particular credit card is a newer account, you may be able to close the account with minimal credit damage.

 


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