Ways to Lower Interest Rate on Credit Card

Consumers favor credit cards for the lure of instant purchases that can be paid later. However, this convenience comes with a high-interest rate on the purchases. And not to forget, the non-payment of dues that incur the penalty rates. But the interest rates on a credit card are not fixed and can vary based on various parameters, including the customer’s preference.Before your credit card dues and the interest become an additional financial burden, contact your bank for negotiating the interest rate on your credit card.Here are some ways to lower interest rate on credit card without having to opt for a balance transfer or switching your cards.

Before you contact the bank, make sure you are thoroughly aware of your credit card terms and conditions, interest rate, statement due, credit limit, and credit score. Check if you have been making credit card payments on time. Track the reason for a non-payment pattern which may be due to illness, unemployment, or other personal losses.It’s better to know your finances before negotiating for a lower interest rate on credit card. Besides, a good payment history and credit score will be a strong basis for the negotiation.

If you have multiple credit cards, choose the longest operated credit card. The advantage of being a loyal customer and a good payment history for an extended period can be used for the bargain. But you do not have the upper hand for a recently acquired new credit card.

Losing their customers is the primary fear of credit card companies. Do the research and evaluate numerous credit card offers in the market before you contact your credit card company. If you find a credit card having similar offers like yours, but with a lower interest rate, the bargain can be in your favour.

If the issuer is unwilling to lower interest rate on credit card, ask for a temporary reduction for a six-month or a one-year period, which may still provide some relief.

If you have been unsuccessful in the first negotiation attempt, don’t hesitate to call back after a considerable three to six-month gap. If you have been consistent in your payments during this period, use this point to present your case again. Besides, you may also get lucky if the customer service staff on the second call gives in to your request.If the second attempt, too, fails, you can subtly threaten the bank of cancelling the credit card or purchasing a better offer from another company.

You need to understand that credit card companies would prefer a low-risk credit cardholder who pays dues on time and maintains a good credit score. Interest rates are dependent on your credit history. If you haven’t managed a good credit record, you aren’t eligible for a lower interest rate on credit card.To sum it up, it’s challenging to come out of a debt trap, which is why you don’t have to settle down with a high-interest rate uncomfortably. Also, refusal of your request shouldn’t stop you from negotiating with your credit company to lower interest rate on credit card. Make consistent efforts to improve your credit score, if it’s lower, and then approach the issuer for negotiation.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.