The answer may surprise you.
- Credit cards often have very high interest rates.
- You may be able to lower your interest rate with a balance transfer credit card or debt consolidation loan.
Credit cards are notorious for having high interest rates, which makes paying down debt more expensive if you carry a balance and have finance charges to pay. If you currently carry a balance on your card and are sending creditors a fortune in monthly interest costs, it’s worth exploring your options for lowering your rate.
Surprisingly, there could be several solutions to make your debt payment cheaper, depending on your situation. Here are some strategies you can use to lower your rate.
Take advantage of a balance transfer offer
One of the easiest solutions to lowering your credit card interest rate is to take advantage of a balance transfer offer.
Balance transfer credit cards provide customers with 0% introductory rates on balances transferred over a period of time. For example, you may qualify for a 0% rate for 12 months if you transfer a balance.
To get one of these offers, you may need to open a new balance transfer card, or a card you already have may provide a 0% rate as a special offer. There may also be an upfront cost, such as a fee equal to 3% of the transferred balance amount. Still, if you’re paying a high rate on your current card and can get it down to 0%, it’s often worth it, especially if you think you can pay off the transferred balance before the 0% rate expires.
Consider a debt refinance loan
You may also consider a debt consolidation or debt refinancing loan. This would involve taking out a new loan, such as a personal loan, that you use to pay off your credit card debt.
Personal loans often have much lower interest rates than credit cards, so using personal loan proceeds to pay off your cards would mean turning your high-interest debt into low-interest debt that’s much cheaper and easy to pay.
Personal loans also have fixed payment terms, unlike credit cards, making it easier to estimate your total costs and your debt-free date.
Ask your creditors to lower your rate
In some situations, it may be possible to negotiate your interest rate with your current card issuer. Sometimes this is the simplest approach, especially if you don’t want to apply for new debt and want to keep charging the card you have.
If you want to try this approach, you can do so by calling your card issuer and asking if they would be willing to work with you to lower your rate. They’re more likely to do this if you’ve been a good customer, and especially if you’ve had the card open for a long time.
You can also provide information on why you are requesting a lower rate. This could be because your credit score has recently increased and you think you should be charged less to borrow. Or it could be because you’re experiencing a period of financial hardship and are worried about being able to make payments at your current rate.
You may not be successful the first time with this approach, but if you get rejected, you can always try calling again and ask someone else. You might also consider requesting a temporary rate reduction if your card issuer declines a permanent one. This would give you time to pay off what you owe while keeping financing costs to a minimum.
Ultimately, the right choice will depend on your situation and your card issuer’s willingness to work with you. But the good news is that all three of these approaches could be viable solutions to lowering your interest rate under the right circumstances, and are worth considering to make paying down debt more affordable in the future.
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