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How to negotiate interest rates on credit cards in the USA!

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Credit cards are widely used in the United States and offer the means of making purchases without the neccessity of immediate payment and a tool for credit history building. But it means that such privileges as interest rates on these cards may be high, and if not controlled properly, it can turn to considerable pressure.

To many people, it may sound overwhelming task to negotiate interest rates on credit cards, but it is possible to do so if one approaches the matter, properly. In this guide, you’ll learn the basic procedures and techniques that will assist you in receiving a better interest rate which will not exert a heavy load on you.

Understanding credit card interest rates

credit card interest rates

However, it’s essential to understand how credit card interest rates work as well as basic strategies of negotiations before proceeding to the overview of specific negotiation strategies related to credit interest rates.

Interest rates on credit cards are stated in a percentage termed Annual Percentage Rate (APR), which is the cost of charging per year. This again depends with the credit score, kind of card or the particular policy set by the issuing bank.

Credit card interest rates can be classified into the following; whereby some of the credit cards attract interest rates that fluctuate within a particular range and others have a fixed interest rate that does not change.

Variable rates are more flexible in that they change as they are adjusted along the trend in the market interest rate while fixed rates are pretty much similar since they are not adjusted or changed in any way.

Why negotiate your interest rate?

Being able to lower the interest rate can result in a huge difference, particularly if you are one of those who have a balance on your credit card most of the time. Interest rates are rather high and as you may know, when the interest rates are high, most of the payment goes towards the interest. Refinancing your interest rate assists you in repaying your balance in shorter time and the overall amount of interest.

Steps to negotiate lower interest rates

Assess your current financial situation

Literally, you should assess your financial credentials before reaching out to the credit card provider. Collect facts about the current interest rate, balance, payments, and your score. With this information on your side, it will be easier for you to make good/valid arguments whenever you are bargaining.

Research and compare rates

A good way to do this is to use the internet and search out what other credit card issuers are offering in the way of interest rates. Consult this information when you wish to compare it with the existing rate.

It is easier to find the average credit card interest rates thru other reliable sites like Bankrate or NerdWallet. Which will enable you to negotiate with the contenders having prior information about the standard rates.

Prepare your case

Before you get on the line with your credit card issuer, be sure to have your message of wanting a lower interest rate and why you deserve it, well-articulated. Degrade your poor payment history, low credit score, and other offers you have received from other issuers. This underlines that you are serious and have done your home work if you are well prepared.

Contact your credit card issuer

Dial the number on the back of your credit card and ask to be connected to customer services where you should request to be attended to by a person who can talk to you about your interest rate.

To make a strong request, one needs to be polite while at the same time very assertive. State your reasons for requesting a lower rate and providing the collected data. That is why if the first representative cannot assist, do not be disappointed, and request to be connected to the manager.

Consider transferring balances

If your issuer is not ready to let down your rate, then there is another option which is to transfer the balance to the card that offers low rates. But most credit cards have balance transfer rate offers, and this can even go as low as 0% for some period of time. This can be a good way to cut down interest costs but do not forget that there are balance transfer fees and the conditions of a new card.

Subtopics related to negotiating interest rates

Improving your credit score

Despite this fact, one of the most actionable steps for a potential borrower to take to qualify for a lower interest rate is by boosting the credit standing. So, when your credit level rises, lenders understand that you are less likely to be a high-risk borrower, which puts them in a more favorable position to change your rate.

Always meet your payments in full and on time, lower the percentage of how much debt you have to the amount of money you earn, and refrain from applying for new credit.

Utilizing financial hardship programs

Most credit card companies have what is called hardship programs for customers who are going through a temporary period of financial issues. These may include amongst others lower or even nil interest rates, non application of certain fees or even changes to payment structures. Ask whether your issuer has them and how you can make yourself eligible for them if you cannot meet up with the payments.

Negotiating other fees

Other areas to look at include, other fees that are charged for credit card services OTE to borrowing fees. High cash advances, or fees for over-the-limit and late payments, along with balance transfers, can become an issue. Negotiate these fees and durations with your issuer; find out if these fees can be removed or charged at a lower amount.

Reducing the interest rates on credit card is another essential skill that can help the client in the determination of the charges resulting from credit cards and increase their financial stability.

Thus, it implies that one can easily reduce the interest rates by studying the existing rates, hunting for the better rates, making aggressive and quite convincing arguments, and last but not least persisting in doing so.

Also, it is desirable to find other ways of credit as well as use financial consultants to get more help in dealing with your credit card balances. It is clearly possible to manage one’s credit card interest rates if one is determined enough and if the right strategies are applied here.

Luiza Peglow
WRITTEN BY

Luiza Peglow

Undergraduate student in Architecture and Urbanism who found her second passion in writing, working as a writer specializing in financial writing.

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