Credit card interest charges can be expensive. According to a quarterly CardRatings.com interest rate survey, in the fourth quarter of 2024, the average credit card rate for the cards assessed in the survey was 24.55%.
Thankfully, there are several ways to get a lower interest rate on credit cards.
First, you can apply for a card with a 0% promotional financing offer for balance transfers. These offers will pay off your existing balance with a line of credit from a new card, effectively transferring your debt from one card to another. However, you will have to pay a balance transfer fee, typically 3-5% of the amount transferred, which is added to your new card’s balance. By law, these transfers must last at least six months, but the most competitive offers can extend as long as 18 or even 21 months. Most of these offers also feature 0% APR financing on new purchases as well.
Another way to lower your credit card interest charges is to get a card with a lower standard interest rate. Invariably, the cards with the lowest standard rate will not be rewards cards, as cards that don’t offer rewards will typically have lower interest rates. To find the cards with the lowest standard rates, look for simple cards with fewer added features, benefits and rewards.
Will credit card companies lower your interest rate if you ask?
While there’s never any guarantee, some credit card issuers have been known to lower the interest rates for customers who take the time to ask. Those with the best chance of success will be long-standing customers who have been paying their bills on-time, and those with high credit scores. And if your credit score has improved significantly since you opened your account, that could also increase the likelihood of receiving a lower rate.
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How to negotiate credit card interest rate
Negotiating a credit card interest rate isn’t very hard. You simply call the number on the back of your card and start a conversation with the representative. Be up-front and let them know that you are calling to see if you may qualify for a lower interest rate. If they ask for more information, stress positive information such as a strong payment record, having an account for a long time and having a newly improved credit score. You can also hint that if you don’t receive a lower interest rate, then you’ll be looking to move your business to a competitor.
Finally, you can ask for your interest rate to be lowered temporarily due to specific circumstances that have affected you, such as experiencing a medical condition or being affected by a natural disaster. In response, some card issuers may lower your rate by a few percentage points, for as long as a year.
What is the best strategy to avoid paying interest on your credit cards?
Other than using a card with a 0% APR promotional financing offer, the best and only way to avoid paying interest on your credit cards is to pay your entire statement balance on or before the payment due date.
The period between your statement closing date and your payment due date is called the grace period. When you pay your statement balance in full during the grace period, credit card interest is waived. By carrying a balance, even a small one, you will be assessed interest on your account’s average daily balance. Likewise, if your payment is received late, you will also be assessed interest on your account’s average daily balance.
➤ SEE MORE:Why am I being charged interest on a zero balance?
3 ways to reduce credit card interest
If you can’t lower your interest rate, or avoid paying interest altogether, there are three other strategies that you can use to reduce your credit card interest payments.
- Make more frequent payments. The key to reducing your interest charges is to understand how interest is assessed. Credit card issuers calculate interest based on your card’s average daily balance. So, if you can make frequent, smaller payments, then you’ll reduce your account’s average daily balance and end up owing less in interest than if you make just one large payment each month.
- Delay making purchases. Another way to reduce your account’s average daily balance is make your necessary purchases later. By delaying large expenses, your daily balance will be lower and you’ll incur less interest charges.
- Keep a card that you pay your charges in full. As explained previously, you can completely avoid interest by paying your account’s statement balance in full, and on time. But if you’re unable to pay off all of your household charges each month, then you can at least pay off a portion of them that you charge to a separate credit card, and pay in full each month. This way, you aren’t incurring interest on all of your monthly charges.
➤ SEE MORE:How to avoid credit card interest and fees
