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Overview
Best Ways to Get Lower Rates on Credit CardsAlthough credit-card issuers frequently lure potential customers with offers of low interest rates and no annual fees, what many consumers don't realize is that creditors can--and often do--raise interest rates whenever they want based on numerous issues that might seem irrelevant to the average person. With such an unpredictable system in place, it's equally surprising how simple it can be to lower the interest rate on a credit card.
Strategies
The first step to lowering a credit card's interest rate is establishing a solid credit background with as high a credit score as possible. Paying bills on time, not charging credit cards up to their limit, restricting the number of credit accounts opened and making payments higher than the monthly minimum are all effective approaches to strengthening one's credit history. A card holder is then more likely to get a positive result simply by calling the credit-card company's customer-service department and requesting a lower interest rate.
Time Frame
It's also possible for a card holder to get a lower interest rate if his credit background isn't spotless. However, if there are negative details on his credit report, such as a late payment or an over-the-limit fee, the consumer should expect to wait about six months before his credit-card company will agree to a lower interest rate. It doesn't hurt to ask anyway during the interim, but remain aware of the impact that a negative credit profile can have on a creditor's decision.
Benefits
The higher a credit-card holder's interest rate, the more beneficial it is to request a lower one. This is even truer for consumers who maintain a monthly balance or who are struggling financially. A direct advantage of requesting and receiving a lower interest rate is that monthly payments decrease as a result, which can allow the card holder to reduce an existing balance faster if she decides to make adequately large payments.
Considerations
If a credit-card company refuses to reduce a card holder's interest rate upon request, he doesn't have to accept the decision as the final word on the matter. The credit-card field is extremely competitive for issuers. Thus, informing a customer-service representative that he intends to take his business to another credit-card company with a lower interest rate is often enough to persuade the first company to try to keep him by granting his request for a reduced rate.
Warning
Even if a card holder has a spotless credit history, some credit-card companies not only refuse to negotiate interest rates, but also raise them to irrationally high levels without warning. Such policies are why it's crucial for consumers to thoroughly research a creditor's practices and read the credit-card Terms and Conditions completely beforehand. Getting stuck with an astronomical, unaffordable interest rate and no way to transfer the balance to a more reasonable credit card is a sure path to financial disaster.
