Credit cards are great tools that can help you manage your cash flow, since you can make purchases now and pay later. Cards can stretch your money a little further, too, if you take advantage of rewards or cash back cards.
But credit cards are also known for coming with high interest rates that make carrying balances expensive for cardholders. If you’ve racked up a lot of debt, you may find yourself having a hard time paying off your monthly credit card bill. But don’t panic. There are ways to make debt payments more manageable.
If you’re struggling to make your credit card payments, you can ask your card provider to make lower monthly payments. Asking your creditor to freeze interest and charges while you deal with your debts can help prevent your debts from increasing.
- Evaluate your current situation
- Build your credit first if you need to
- Find competing credit card offers
- Understand the credit card company’s perspective
- Call and make your request
- Try a balance transfer card instead
1. Evaluate your current situation
Before you call the customer service number on the back of your credit card, understand what you’re working with. Know your current credit card terms, including the grace period, statement due date and your current balance.
By coming prepared, you’re setting yourself up to do a better job of evaluating the options your credit card company might offer.
Don’t forget to check your credit, as well. You can use this as leverage in your negotiations. Having strong credit may indicate you’re likely to repay your balances and what you owe, so credit card companies may be more willing to meet your requests.
2. Build your credit first if you need to
If you find your credit score is less-than-optimal, you may want to work to build your credit score so you look more creditworthy to the bank.
Try to keep your credit utilisation rate — the percentage of your credit limit that you’re using — at 25% or less.
3. Find competing credit card offers
Credit card companies and banks need to compete with other brands to acquire more customers. That means they need to stay competitive with their rates.
Do your homework and look at other available credit cards. If you find a similar card to yours that offers a better rate, note the card’s name, company and terms. You’ll want to share this information when you reach out to the bank.
4. Understand the credit card company’s perspective
You can better negotiate if you understand what the bank or credit card company needs to see on their end to agree to your request. Sometimes a bank would need to ensure customers were lower-risk before agreeing to drop the interest rate.
If you pay off, or significantly reduce, an outstanding balance, it may result in better credit scores. Once reflected on your credit reports, a rate decrease could be much more likely.
5. Call and make your request
Now you’re ready to get your credit card and call the customer service number listed on the back. When you reach a representative, politely explain the reason for your call.
If you have good credit, you can remind the representative of that and point to your history of being a good customer (by regularly using your card and paying your bills on time).
You may want to share your information about the other offers available from different companies, and explain why you may transfer your balance to a new credit card if you can’t get a lower interest rate from your current company. You can also ask if they will at least match the interest rate on a competing card.
6. Try a balance transfer card instead
Balance transfer cards may provide you an alternative for getting a lower interest rate on your current credit card debt. This may allow you to consolidate your existing balances from multiple cards onto a single, new card.
You’ll want to use a credit card that offers a 0% introductory annual percentage rate, or APR, offer for balance transfers to save money on your debt repayment.
Bottom line
Here’s what to keep in mind if you want to learn how to negotiate with your bank or credit card company to lower your credit card interest rate .
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Do |
Don’t |
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Do your homework first. Know your credit and information for other card offers. You can use both pieces of information to negotiate. |
Don’t go into the negotiation without being prepared. Know what you’re asking for, why you’re asking for it, and other offers that are available. |
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Do ask to speak to a manager if the initial representative says “no” or seems unhelpful. |
Don’t settle for a flat “no.” If your request is declined, ask for an explanation of why and how to change your situation to get the interest rate you want. |
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Do be friendly, polite and easy to work with. Customer service reps are people too, and they likely want to help you. Remember that any limitations are likely due to company policy, not that one individual. |
Don’t be rude or belligerent. Don’t lie to the representative, either. They can always check your account history, after all. |
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Do call again if your initial request for a lower interest rate is declined. And even if you do achieve a lower rate, you can still try to call back in six months to see if you can access an even lower rate on your credit card. |
Don’t give up after a single call. Call again — or consider exploring other options, like a balance transfer card. |
Use this process for negotiating a lower rate with your bank or credit card company. If you succeed, you might be able to save on your debt repayment and pay down your balances faster.