Lower Your Credit Card Interest Rate with These Magic Words

Updated November 03, 2020
posted on 06-07-2019

In today’s world, it feels like everyone struggles with credit card debt. Because of market uncertainty and constantly changing job market, credit card debt may feel more insurmountable than ever before.
According to the 2019 Experian Consumer Credit Review, the average American has over $7,000 in debt between traditional credit cards and retail credit cards. With credit card annual percentage rates (APRs) climbing to 14.99% and higher, it could take years of minimum payments to pay off your balance.

The good news? You can lower interest rates on credit cards but it requires having the right credit – and a little know-how on what to say. If you’re serious about taking care of your credit card bills, here’s what you need to know to save big.

How to Get Your Credit Card Company to Lower Your Interest Rate

The first step in understanding how to lower credit card interest is understanding your credit  and why it’s important. Without good credit and a compelling argument, your best efforts to lower your interest rate may fall flat.

Know Your Credit Worthiness

When requesting a lower interest rate from your lender, the first thing they’ll look at are credit reports and credit scores. Before you call any bank, check these first. 

Under federal law, all Americans are entitled to access their credit reports once every year. However, all three credit bureaus (Equifax, Experian and TransUnion) offer free weekly access to credit reports through April 2021. To access your credit report for free, visit annualcreditreport.com, which is the only website authorized to provide free access to credit reports. 

Although the web portal gives you access to your credit reports, it will not provide you access to your FICO credit score. Most lenders use the FICO model when determining credit worthiness and making lending decisions. If you don’t already have access to your credit score as a credit card benefit, consider paying for access before trying to negotiate a lower interest rate.

Understand What a Good APR Is

If your overall credit is solid – and your debt-to-income ratio is relatively low – then you’re already in a good place to start negotiating for a lower interest rate. Before you start asking for something better, however, know what you are asking for. 

According to Experian, the average APR interest rate is between 14% and 15%, but interest rates can vary between different types of credit cards. For example, rewards-earning credit cards offer more value for everyday spending, so the APR on those cards may be higher than those without rewards. 

Before calling, do some research to determine what similar credit cards offer to new cardholders. By understanding what offers are currently available, you can ask for a new rate that is better in line with the rest of the industry.

Call and Negotiate Your Rate

WIth an understanding of your creditworthiness and what other credit cards are offering as an interest rate, it’s time to call your bank and negotiate a better rate. Before dialing their number and making your request, write down all your details, create a script, and craft a confident argument as to why you deserve a lower interest rate on your credit cards.

What to Say to Lower Your Credit Card Interest Rate

The key to reducing your card’s APR is confidence. Use a friendly and respectful tone, address the customer service agent by name, and use the arguments from your script.

1. The “Loyal Customer” Tactic

Let’s say you have a credit card with Discover. If you were asking Discover to lower your APR, you may start your conversation by reminding them that you’ve been a loyal customer for a certain number years and have a great credit history with them:

"Hi, [Agent Name]. I'm calling because I've been looking over the terms of my account. Because I have a good, 12-year credit history with Discover – and I have a credit score above 700 – would it be possible to get a lower interest rate?"

At this point, the agent may ask to go over your history and perform a credit check. Based on the information on your credit report (which you already know) and their internal controls, they may be able to offer either a lower interest rate or a promotional rate to pay your balance off faster.

 2. The “Shopping Around” Tactic

If that doesn’t work, another script you should have prepared is the “shopping around” tactic. Again, let’s assume you are asking Discover to lower your APR. After doing your research on other credit card offers you may qualify for, you could approach the conversation as if you have another option in mind: 

"Hi [agent name], I'm considering an offer that came in the mail for a card with a 0% interest balance transfer. I'd prefer to stay with Discover because I've been a customer for so long. Is it possible to reduce my standard interest rate to 9%?"

Again, they will usually ask to pull your credit and go over your history with them. If you sound serious about shopping around, and can name the other credit card and interest rate you are considering, you may be able to negotiate a lower interest rate.

3. The “Hang Up, Call Again” Tactic

If the agent says they cannot help you at this time, be sure to genuinely thank them for their time and end the call. After a few days, call again and try the tactic that you didn’t use. Just because one person said “no” doesn’t mean that you don’t have a chance of getting a lower interest rate. You may be able to lower your options by finding the right customer service agent.

Don’t Give Credit Card Companies More Money – Lower Your Rate

At the end of the day, you have nothing to lose but time by asking for a lower interest rate. Understanding your credit card terms – and why you qualify for a lower interest rates on your credit cards – not only helps to improve your financial situation, but it also helps you pay down your debt faster with fewer interest rate payments.

Ask The Experts About Lowering Your Interest Rate

At InvestingAnswers, all of our content is verified for accuracy by certified financial experts. Our experts also take the time to answer your questions at the end of each article.

Why Won’t My Bank Lower My Credit Card’s Interest Rate?

There are many different reasons why your bank may not lower interest rates on credit cards. First, your credit history may be less than perfect. If you’ve missed payments or have a balance close to your credit limit, the bank may not see you as a prime candidate. In other situations, the prime rate may be too high to offer you a substantially lower interest rate. Before calling, be sure you understand your credit history and create a compelling argument as to why you should get lower APR.

What’s a Good Credit Card Interest Rate?

According to Experian, the average credit card rate is between 14% and 15%, but this can be higher or lower (depending on the type of card you hold). Rewards credit cards and credit cards for bad credit usually have higher interest rates while balance transfer credit cards often have promotional or low interest rates. Generally speaking, a good credit card interest rate is lower than 14% for all types of credit cards.

How Can I Improve My Credit Score and Get a Better Interest Rate?

Improving your credit to get a lower interest rate takes discipline, but it certainly can help you get better rates and qualify for the best credit card offers over time. 

First, make sure you are making all of your payments on time. Even if they’re the minimum payments, a history of paying debt on time can raise your credit score significantly. 

Next, paying down balances – especially on higher interest credit cards – not only saves you money, but it can also reduce your debt-to-income ratio while increasing your credit score. 

Finally, be smart about how often you apply for credit cards. Having too many hard credit checks on your record can make you look irresponsible, and will make your bank question why you’re looking for a lower interest rate.