5 Ways To Lower Your Credit Card Interest Rates During Peak Inflation

Rawpixel.com / Shutterstock.com

The latest Consumer Price Index report (CPI) showed an overall price increase of 0.4% for all items, seasonally adjusted. It’s not the biggest jump we’ve seen, but the CPI, which shows the average change in prices for consumer goods and services, has risen about 7.1% in the past 12 months.

Meanwhile, interest rates continue to climb in 2023. Credit card companies typically set rates based on an amount plus the prime rate, with the amount depending on your credit score.

In spite of rising interest rates, it’s possible to get credit card companies to reduce the monthly interest charges for you. How? Check out these tactics that have worked for many consumers over the years.

Call and Ask for a Rate Reduction

Credit card companies may raise your interest rate if you miss payments (this is called a penalty rate) or as a result of the prime rate increasing. They might also raise your rate if they notice your credit score has decreased. According to Experian, they must give you 45 days notice before raising your rate for that reason.

However, credit card companies will rarely lower your rate without prompting, except in certain circumstances. (For instance, if you are paying the penalty rate, the credit card company must reduce that rate after six months of on-time payments.)

So, you need to take action. If your credit score has increased since you received the card, and you’ve made all your payments on time, call for an interest rate reduction.

Get Credit Card Perks

Be prepared to make a strong case for an interest rate decrease. Point out your credit score and on-time payment history. You might get lucky on the first try.

Escalate the Call

If the first person you speak with says no, ask for the Customer Retention Department. The people in this office want to keep customers.

You may be able to negotiate with them by threatening to transfer your balance to a lower interest card, unless they lower your rate to stay.

Still No Results? Try Again

Often, lowering your interest rate simply depends on the mood of the person on the other end of the line. It might pay to wait a few days and call back at a different time of day. You’re likely to get a different person who just may decide they can make the change for you.

If you’re actively working on improving your credit, wait a billing cycle and then call again. Your credit score may have increased enough for your credit card company to justify an interest rate reduction.

Follow Through on Your Threats

If you still can’t get your credit card company to lower your interest rate, it’s time to shop around for a better rate. First, look at the cards you already have and see if it’s worth it to do a balance transfer. Remember to do the math and decide if the balance transfer fees make the money you’ll save on interest worth it, which depends on how quickly you anticipate paying off your balance at the lower rate.

Get Credit Card Perks

Your best bet is look at a new card with a 0% introductory APR. Then, make a plan to pay off your balance in full before your introductory rate expires. Just don’t make the all-too-common mistake of charging up your old card that you just paid off.

Consider Debt Consolidation

Even with rising interest rates, a personal loan or a home equity loan will often offer a lower interest rate than credit cards. You can even consolidate multiple credit card balances into one monthly payment. The downside is that you’ll have one lump-sum payment each month, rather than smaller payments spread out through the month. You’ll need to budget cash flow carefully to ensure you can make your payment on time.

Bottom line: Even during times of inflation, there are ways you can decrease your credit card interest rates. With the holidays coming up, it’s a good time to try to reduce interest rates so you can pay down balances faster.

More From GOBankingRates

BEFORE YOU GO

See Today's Best
Banking Offers