4 Ways To Negotiate Credit Card Interest Rates
Are your credit card payments too high and you’re dreading needing to negotiate credit card interest rates. One common misconception credit card holders have is the belief that credit card interest is fixed. Interest rates are the main way banks trap customers in credit card debt. It’s important to note that you don’t have to pay any interest at all if you pay your card balance in full every month.
In fact, having to negotiate credit card interest rates may seem scary at first, but it isn’t that hard to do. All you need to do is perform a little research beforehand.
Today we’re discussing the different types of interest rates and some tips to help you lower them.
Fixed and Variable Interest Rates
A fixed interest rate is the constant rate of interest you pay on your card. The bank can change the rate if you’re late on payments (more than 60 days), the initial fixed rate was a card promotion, or you completed a debt management program.
Banks must notify you 45 days in advance if they plan on changing your fixed interest charges. As a result, you reserve the right to opt-out of a rate increase by talking to your lender. Opting-out will allow you to pay your balance with the initial fixed interest rate.
Variable interest rates can change anytime based on the economy. In addition, variable rates are dependent on the index rate (prime rate). When the prime rate, a rate managed by the Federal Reserve, increases then your interest rate also rises.
Cardholders with a variable interest rate will not receive advanced notice of a rate increase, nor are they given a choice to opt-out.
It’s important to pay attention to the stock market and news regarding the prime rate.
Let’s look at ways to get lower payments.
1. Call Your Credit Card Company
One of the best ways to negotiate your interest rate is by calling your card company. A simple conversation where you list how responsible you’ve been with payments and your loyalty to the company can sway creditors to lower your rate.
2. Paying the Balance off in Full
When you get your credit card statement, your eyes immediately go to the minimum payment amount. That’s psychology. In your mind, paying the minimum balance is a lot better than paying in full. Wrong!
Paying the balance in full will not only get you out of debt faster, but it will also be a great selling point when you call the creditor to lower your rates.
3. Pay Your Balance on Time or Consider Balance Transfers
Another way to negotiate your rates is to bring up your payment history. Paying your balance on time shows responsibility. It also prevents the card company from adding additional fees to your payment.
Try paying your card balance on time every month.
It’s possible to transfer your card balance to another card with a lower interest rate. Talk to your bank about any transfer fees or rules they have regarding balance transfers.
Sometimes, this may be the best way to secure a lower interest rate.
4. Get A New Card
When all else fails, apply for a new credit card. Research cards with perks like cash back and travel points. Finding a card that suits your needs will benefit you in the long run.
Next, research all of the cards with lower interest rates. Beware of cards with low promotional rates. These rates last for a set period and then change into higher fixed or variable rates.
Improve Your Credit Card Knowledge
At Credit Squared, we work to improve your credit card knowledge and help you make educated choices when selecting a credit card.
Contact us for more information.
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