Can I Ask My Credit Card Company For A Lower Interest Rate?

[MortgageQueen]

Great little article on credit card debt. Highlighting is mine. Hope you find this helpful.


Can I Ask My Credit Card Company For A Lower Interest Rate?
If you're asking this question, the chances are it’s because you are carrying credit card debt. Before looking to reduce your interest rates, you should be asking yourself whether or not you can pay off your debt – or at least part of it. Credit card debt is the most expensive type of long-term debt – so carrying any balance is a bad idea.
For example, let’s assume that you are paying 20% interest on a balance of $10,000. That’s $2000 a year in interest that you are paying out. If you could get your credit card company to reduce to rate from 20% to 18%, then you would only save $200 a year – you would still have to pay $1800 in interest. However, if you could pay off just $1000 without having your interest rate reduced, then you would still save $200 a year – and if you could pay off $2000, the savings would be $400.

There’s no harm in asking
That having been said, your credit card company isn’t going to penalize you for asking to have your interest rate reduced – and there’s a possibility you may succeed.

Credit card companies usually set interest rates depending on your credit score. They do this at the time that your interest rate was set – so if you think that your credit score has improved since then, there is a possibility that they will be willing to lower it. Before you ask, however, it’s a good idea to check your credit report and score to see if it has improved.
If you don’t get anywhere with the first person you talk to, asked to speak to their supervisor or someone else who can make a decision. This can often yield results even if the initial response wasn’t positive. Another tactic to use is to threaten to close your credit card – but keep in mind that this can harm your credit score if you don’t pay off the balance first.

Look at lower rate cards
If you really don’t get anywhere, see if your credit card issuer has lower interest cards on offer. For example, basic cards usually have a lower rate than rewards cards – the credit card company has to pay for these rewards, so they charge you more. It may be that they are willing to open a new lower rate card for you, which will reduce charges going forward. However, they probably won’t allow you to transfer your existing balance to the new card, so this isn’t going to be a short-term fix.

Other alternatives
Another approach to getting lower interest rates is to apply for a credit card with another company. Look for ones with low interest rates that offer balance transfers. These often have a special introductory rate as well, which can you save you money immediately. However, don’t fall into the trap of transferring your balance and then running up more debt on your original credit card. This will just make a bad situation worse.
If you really want to drive down your interest rates, see if you can get a loan or line of credit from your bank. You can then use this to pay off your high-interest credit card, and then pay a much lower rate on the loan. The same warnings apply however – don’t take out a loan and then run up your credit card debt again.





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[FLA]

Thanks for sharing.

[bobbyreyes]

Thanks MortgageQueen for sharing.