You might be surprised at the answer.
- Credit cards often have very high interest rates.
- You may be able to lower your interest rate with a balance transfer credit card or a debt consolidation loan.
Credit cards are notorious for having high interest rates, which makes paying off debt more expensive if you have a balance and need to pay finance charges. If you currently have a balance on your card and are sending creditors a fortune in monthly interest charges, it’s worth exploring your options for lowering your rate.
Surprisingly, there could be several solutions to make paying off your debt cheaper, depending on your situation. Here are some strategies you may be able to use to lower your rate.
Take advantage of a balance transfer offer
One of the easiest ways to lower your credit card interest rate is to take advantage of a balance transfer offer.
Balance transfer credit cards offer customers introductory rates of 0% on transferred balances for a certain period of time. For example, you can benefit from a rate of 0% for 12 months if you transfer a balance.
To get one of these offers, you may need to open a new balance transfer card – or a card you already have may offer 0% as a special offer. There will likely also be an upfront cost, such as a fee equal to 3% of the balance amount transferred. Still, if you’re paying a high rate on your current card and can lower it to 0%, it’s often worth it, especially if you think you can pay off the transferred balance before the 0% rate expires.
Consider a debt refinance loan
You can also consider a debt consolidation or debt refinance loan. This would involve taking out a new loan, such as a personal loan, which you will use to pay off your credit card debt.
Personal loans often have much lower interest rates than credit cards, so using personal loan proceeds to pay off your cards would be like converting your high-interest debt into low-interest debt. interest much cheaper and easier to repay.
Personal loans also have fixed repayment terms, unlike credit cards, so it’s easier to estimate both your total costs and your repayment date.
Ask your creditors to lower your rate
In some situations, it may be possible to negotiate your interest rate with your current card issuer. This is sometimes the easiest approach, especially if you don’t want to apply for new debt and want to keep charging the card you have.
If you want to try this approach, you can do so by calling your card issuer and asking if they would be willing to work with you to lower the rate. They’re more likely to do this if you’re a good customer, and especially if you’ve had the card open for a long time.
You can also explain why you are asking for a lower rate. This may be because your credit score has recently gone up and you think you should pay less to borrow. Or it could be because you’re going through a tough financial time and you’re worried about being able to make payments at your current rate.
You may not be successful the first time with this approach, but if you’re turned down, you can always try calling again and asking someone else. You may also consider requesting a temporary rate reduction if your card issuer declines a permanent reduction. This would give you time to pay off what you owe while keeping finance costs to a minimum.
Ultimately, the right option will depend on your situation and your card issuer’s willingness to work with you. But the good news is that these three approaches could be viable solutions to lowering your interest rate under the right circumstances — and it’s worth considering them to make paying off debt more affordable in the future.
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