How to Lower Interest Rates

The average American family owes more than $8,000 in credit card debt. If you're carrying a large balance, you can't afford to waste money on high interest rates. Fortunately, with one phone call, you can dramatically lower the interest rate on your credit card, potentially saving you hundreds or even thousands of dollars.

Things You'll Need

• Credit card
• Phone

Instructions

Lowering interest on existing credit cards

1. Phone the customer-service number on the back of your credit card and ask to speak to someone about canceling the card. You will be put through to the customer-retention department.

2. Say that you have received an offer in the mail from another credit card company and that they're offering you a lower interest rate.

3. Say that you want to cancel your credit card and transfer your balance to the rival card, unless they can match the rate. Most often, the customer-retention representative will offer you a better rate on the spot, without you having to change cards.

4. If your current credit card company refuses to lower the rate, switch to another card with a better rate. Many cards offer low introductory rates. Just make sure you either pay off the debt or switch to another card once the introductory period expires.

Getting a lower interest rate on new cards and loans

1. To get a lower interest rate on new credit cards and loans, you will need to raise your credit score.

2. Make sure you don't miss any monthly payments. Being even a day late is enough to hurt your credit score.

3. Don't apply for too much credit at one time.

4. Don't cancel credit cards once you've paid them off. Simply put them away somewhere that you won't be tempted to use them.

5. Stay well below your credit limit, and never max out credit cards.

6. Diversify the types of credit you have. If you have a mortgage and a car loan, get a credit card and a store card.

Resources

• Federal Reserve