How to lower your credit card interest rate in 5 easy steps

Here are some ways to accelerate debt payoff and score a lower credit card interest rate. (iStock)

Credit card debt can be crippling to your financial wellness, and once you’ve racked up a large balance, it may feel like there’s no way out. If you’ve ever felt this way, you’re not alone.

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On average, Americans with credit cards carry $6,194 in debt, according to a report by Experian. Some areas, especially southern states, carry a higher average debt burden than others. With average interest rates hovering around 17%, low minimum payments and no set repayment timeline, such a balance could take decades to pay off.

If you’re serious about getting rid of your debt, scoring a lower credit card interest rate could help you save money and accelerate your debt payoff. Here are some ways to make that happen.

1. Call your credit card company

While you may not be able to get a permanent reduction in your credit card interest rate this way, you may be able to negotiate for a lower rate temporarily—which can come in handy if you’re just looking to pay off some holiday debt.

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Start by politely explaining your reasoning for asking for a lower interest rate. If you’ve always made your payments on time, point out your history of being a good customer. It can also help if your income has increased or your credit score has improved since you first opened the account.

If you don’t get what you’re asking for, remain polite. But don’t be afraid to call again and speak with a different agent.

2. Apply for a low-interest credit card

Some credit unions and even banks offer credit card interest rates in the single digits. These low-interest credit cards can allow you to transfer your balance and take advantage of the lower rate on your current debt, as well as any new charges you make to the account.

Check with your local credit unions and community banks for credit card comparison, so you can find the best fit for you. Just keep in mind that low-interest credit cards often require excellent credit, which typically means a FICO credit score in the high 700s.

3. Apply for a balance transfer credit card

Balance transfer credit cards offer introductory low or 0 percent APR promotions, which can last anywhere between six and 21 months. That can give you valuable time to make a huge dent in your debt.

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Note, however, that most balance transfer credit cards charge an upfront balance transfer fee, which is typically 3 percent to 5 percent of the transfer amount. Also, once the promotional period ends, you can generally expect a high interest rate again.

Balance transfer credit cards are typically available for people with good credit or better, which means at least a 670 FICO score. If you’re considering one, use an interest rate calculator to get an idea of what your savings will be.

4. Improve your credit

If you don’t currently qualify for a low interest credit card or balance transfer credit card, take some time to work on improving your credit. Ways to do this include:

  • Getting caught up on past-due payments and continuing to pay on time.
  • Paying down credit card balances.
  • Asking a family member with stellar credit to add you as an authorized user on their credit card account.
  • Avoiding new debt unless absolutely necessary. 

With these and other tips for improving credit, you may soon qualify for a better credit card interest rate.

5. Get on a debt management plan

If your credit card debt situation is dire, it may be wise to enlist the help of a credit counselor, who can get you set up on a debt management plan. With this plan, you’ll make one monthly payment to the credit counseling agency, which then divvies it up and pays your creditors on your behalf.

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Credit counseling agencies may also be able to negotiate lower interest rates and payments for you.

The catch is that you may be required to close your credit card accounts, which can negatively affect your credit score. Also, debt management plans typically come with a small monthly fee, so it’s best to consider one only if you don’t have a lot of other options.