How to get a lower interest rate on your credit card.

It is a safe bet, nowadays, that everyone walking on the street and carrying a wallet will have, if not more than at least one credit card in their pocket. In an almost cash free world cards; be they bankcards, credit cards or debit cards, have become a necessity and a convenience as well. Credit card, out of all the different cards, can provide a lot of relief for people, especially with limited income, by giving them the freedom to make necessary purchases when it’s needed and then paying back the money later. Though the sooner that ‘later’ comes, the better it is for the card holder.

Convenience can become nuisance

True, having the freedom the credit cards give can make things easy but the amazingly high percentage of the interest rates charged for this use can mean that you are actually paying too much money for the purchases that you made. Most credit card deals give you a few days to repay the money, either starting from the time the purchase is made or after issuing the bill. It needs no saying that the best way to use a credit card is to pay it off before that time expires , otherwise, be ready to cough up hefty sums of money as interest on your borrowings.

Grab the bull by the horns

You must feel that your credit card has a high interest rate, and who doesn’t?  Surveys and studies suggest that the best way to get a lower interest rate on your credit card is to simply ask your credit card provider to lower your interest rate. Simple isn’t it? Actually, if you have a good track record, are not in debt all the time and boast a good credit rating, it is as simple as making a phone call, giving a rather ‘practiced’ speech and enjoying rewards, in the best case scenario, that is.
It won’t hurt though, that before actually making that call you do a little preparation to make your case sound more reasonable and less risky for the bank.

Preparing for the big day

While trying to get a low interest rate on your credit card, what you need to understand is the banks point of view. While the interest rate charged is money making tool for the bank, the percentage reflects your credibility in the banks eyes. If you want to ask for a lower interest rate on your card, it would make sense to try pay your dues timely or at least pay something more than the minimum amount due. Having or good credit rating with no late payment notices, a good credit score and a reasonable debt-to-income ratio are things that will make your case worth considering. It would not make a lot of sense, however, to ask for a lower interest rate if you are using a bad-credit credit card. If you are sure that you have a decent case, do a little research and find out what interest rate other companies & banks are offering, preferably, look for those that are lower than yours.

Making the call

When you think you have enough information about the current low interest rates available in the market, give your bank a call. There are a few different approaches you can take:

  1. Tell them that after visiting a few competitors’ sites, you have realized that they are offering better interest rates than what you are currently getting. Will the bank give you the same interest rate on your credit card offered by others?
  2. You can request them to reduce your interest rate, for example from 16% to 9%, to bring it in line with the rate being offered in the market. You can mention your good credit rating to register the point that you are a customer worth taking care of.
  3. Tell them that you got a mail offer from xyz to transfer your credit card balance to their bank, and they ore offering a lower interest rate. Will your bank be able to match this offer or should you transfer your balance to a new provider?
  4. Ask them to give you the same low rate they are offering to new customers as you have been a loyal customer with good credit history.

If you don’t feel comfortable making phone call you can also write your bank letters to the same effect. According to a survey, more them 55% of customers who called their provider and asked for a lower interest rate on their credit card got it, with an average reduction of 7-10% in the rate. This does not, however, mean that every one will get a reduced rate on their card after a phone call. Don’t forget the other 45% or so who didn’t get any reduction in their interest rates. The best thing to do, if you fail the first time, is to get your history and rating better and after a few months try again. Keep your fingers crossed and you might finally get an interest rate on your credit card you are comfortable with.