Save Money: Lower Your Credit Card Interest Rate

If you consistently carry a balance on your credit card from month to month, lowering the interest rate can save you money. For instance, if you consistently have around $1,000 balance on your card, you could save almost $200 a year simply by lowering your interest rate a few percentage points.

Lowering your credit card interest rate might be as simple as making one phone call to your creditor. Your chances are very high in getting what you want if you:

• Make your monthly payments on time
• Have a low debt-to-income ratio
• Pay more than the minimum
• Don’t routinely "max out" your card

3 simple steps

If your credit standing isn't the best, there are a few simple steps you should take before contacting your creditor. The goal is to be prepared and make yourself look like an attractive customer to increase your chances of securing a lower interest rate:

1. Have you made your monthly payments on time? If not, this is your first step. As with any business, a customer who pays their debts on time is a valued customer. Be sure that there are, at minimum, three consistent months of timely payments under your belt. This way, you’ll have some leverage in your quest for a lower interest rate.
2. Research the interest rates of competing crediting cards. In today's market, there are dozens of credit card companies all competing for your business. Many of them have low interest rates, and some have added perks that include no annual fees and a points system to earn gifts. Jot down all this information so that you can quickly point to specific examples when negotiating with your credit card company.
3. Check out the web site of your credit card company. What rates are they offering potential new customers? If your rate is at 18.9% but they're offering new customers 6%, that provides you with some leverage.

Bargain away

Now that you have leverage, call the 800 number listed on your statement. Remember, there is so much truth in the saying, "Nothing ventured, nothing gained."

1. Tell the customer service representative that you're requesting for your interest rate to be lowered.
2. Be sure to make your request valid by stating you have been a loyal and creditworthy customer. Back up your claim with facts. Even if it has only been three months of consistent "on-time" payments, be sure to state you experienced some hardships but have established a track record that shows improvement.
3. After you have asked, you'll be put on hold as representatives must seek approval from their supervisors.
4. If the representative returns with "We are unable.....",  then bring out the bargaining tools and state you will go to a rival company and have the entire balance transferred to a new card.

There's no harm in trying: you have nothing to lose and everything to gain. To help you with the credit-card-comparison process, visit Canadian Credit Cards for a comprehensive listing of cards. It’s also a good idea to check your credit report and score before speaking with your credit card company. This will let you see the information they see when evaluating you as a customer.

If you’ve called your credit card company recently to get an interest-rate reduction, tell us how it went in the comments section below.