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4 Ways to Lower Your Credit Card Interest Rate (APR)

Credit cards offer a convenient way to make purchases whether or not you have the cash in your checking account. Plus, taking advantage of credit card rewards can help stretch your dollars a little further. 

But the notoriously high interest rates attached to credit cards make it very expensive to carry a credit card balance. If you regularly carry a balance on a credit card with a high interest rate attached, lowering that interest rate should be a top priority for you. 

A lower interest rate can help you get out of credit card debt faster. And with the right action steps, your credit card company might be willing to lower your interest rate. 

Ways to Lower Your Credit Card Interest Rate

If your credit card comes with a high interest rate, there are several ways to lock in a lower rate. The right option will vary based on your situation. 

1. Negotiate With Your Credit Card Issuer

As with many areas of personal finance, negotiating with your credit card issuer can lead to big savings. However, a successful negotiation process isn’t as simple as calling up your credit card company. Instead, the best chance of success comes with a bit of preparation ahead of time. 

a. Check Your Credit Score

Your credit score is one of the major factors at play when a credit card company determines your interest rates. So your first step here is to check your credit score

In general, a higher credit score means a lower interest rate. After all, interest rates are a reflection of the lender’s perceived risk. A lower credit score means a higher risk for the lender, which they compensate for with a higher interest rate. 

If you have a great credit score, then you have a useful bargaining chip in the negotiation. 

b. Improve Your Credit Score

If your credit score is less than ideal, it’s likely not the right time to approach your credit card company for a lower interest rate. Focus on improving your credit score instead. 

Use these strategies to improve your credit score:

  • Check Your Credit Report. You can get a free copy of your credit report to scan for errors in your credit history. If you spot an error, you can dispute it with the credit bureaus. 
  • Make On-time Payments. Payment history impacts your credit score in a big way. Even if you are only able to make the minimum payment, do your best to make it by the due date. 
  • Lower Your Credit Utilization Rate. Credit utilization accounts for 30% of your FICO score. It represents the ratio between your revolving credit balances and your credit limits. Typically, a lower credit utilization ratio leads to a better credit score. You can lower this ratio by paying off debt or increasing your credit limits. 

Although improving your credit score can take time, good credit can help you lock in lower interest rates over a long period of time. That could save you hundreds or thousands of dollars per year if you carry a credit card balance.

c. Gather Competing Credit Card Offers

Most of us receive credit card offers on a weekly basis, if not daily. Whether you’re receiving these offers by snail mail or email, check the interest rate before tossing them away. 

The promise of lower rates is one of the tools credit card issuers use to lure new customers, so it’s likely you’ll find a better interest rate soon enough. Collect as many offers with better credit card terms as you can before jumping into negotiations with your current credit card issuer.

d. Call Customer Service

After you’ve worked on your credit score and gathered competing offers, it’s time to call up your credit card company. 

Be ready to present your case to the customer service representative. Whether you’re banking on your improved creditworthiness or are willing to switch to a new credit card, have the information right in front of you. 

In general, credit card issuers are more willing to negotiate with long-term customers who have a solid history of on-time payments. But regardless of your relationship with the credit card issuer, there’s no harm in asking for a better rate. 

If you get a “no,” don’t be discouraged. Ask to speak to the representative’s supervisor or call back a couple of times to try to speak with someone else. If you’re uncomfortable asking for what you want, remember that the worst they can say is “no” (again). 

2. Take Advantage of a 0% APR Balance Transfer Offer

At some point, the negotiations may stall, or you might get tired of hearing “no.” But that doesn’t have to be the end of your quest for a better credit card APR. Your next step is to look for a balance transfer credit card to lock in a lower interest rate. 

Some of the best balance transfer credit cards offer 0% intro APRs for 12 months or longer. Although the interest rate will rise after that, this lower rate period will give you some breathing room to focus on paying down your balance without sky-high interest charges. 

Before jumping into a balance transfer introductory APR opportunity, check out the balance transfer fee. Depending on the size of your credit card debt, the costs of switching could outweigh the interest charges you’d otherwise incur. 

3. Apply for Credit Cards With a Lower APR

The typical credit card interest rate ranges from 15% to 20%, depending on the card, your creditworthiness, and other factors. 

But not all credit cards are created equally. Some credit cards have lower interest rates than others, which can lead to lower monthly payments due to smaller interest charges. If you can’t get your current credit card issuer to budge on the interest rate, seek out low interest credit cards

4. Apply for a Debt Consolidation Loan

A credit card is certainly a convenient way to spend money. But it’s not always the right option for your finances. In some situations, the relatively high credit limits can make the temptation to overspend a slippery slope for your finances. 

If you would prefer to avoid adding another credit card to your wallet, then a debt consolidation loan could be the solution. Typically, debt consolidation loans offer lower interest rates. Plus, the fixed monthly payments and set terms can make it easier to budget as you pay down your debt.  

It works by paying off your credit card balances with a personal loan. After that, you can focus on the set monthly payments without worrying about the variable interest rates that can fluctuate with your credit card. 

Final Word

A credit card can be a useful financial tool. But if there’s a high interest rate attached to your credit card balance, that can put a wrench in your long-term plans. 

The good news is that it is possible to lock in a lower interest rate. That might mean negotiating with your current credit card issuer, jumping ship to a different one offering a better rate, or applying for a lower-interest debt consolidation loan. 

Whatever you decide, work on paying down your credit card balance over time with the eventual aim of getting out of credit card debt. When you pay off your charges in full each month before interest begins to accrue, you don’t have to worry about your credit card’s interest rate at all. 

I'm also including a bio here: Sarah Sharkey is a personal finance writer who enjoys helping people make better financial decisions. When not nerding out about money, Sarah enjoys traveling, hiking, and reading. You can connect with her on her blog Adventurous Adulting.