How to Lower Credit Card Debt & Interest

Lowering your interest rate can help you lower your credit card debt.

When you have high credit card debt and interest rates, it can feel like an uphill struggle. Even if you're making the minimum payment every month, you might feel like your debt doesn't get any lower. You need to lower your interest rate so more of your payment will go towards the balance, Then you need to focus on paying down the debt. It takes a concentrated effort to accomplish this.

Things You'll Need

• List of low-interest credit cards

Instructions

1. Make a list of credit cards with lower interest rates than the cards you currently have. You can find low interest cards on comparison sites like creditcards.com or through offers that you receive in the mail. If you have a savings or checking account at a bank or credit union, find out if they offer any low-interest credit cards to customers.

2. Call each of your current credit card issuers and ask them to lower your interest rate. Emphasize your good payment history, and let them know that you are aware of other low-interest cards and that you will switch to another issuer and transfer your balance if they will not match those offers. If they refuse, apply for a low-interest card and transfer your balance to the new card.

3. Check your next statement to make sure that your interest rate was changed to the lower rate you negotiated. If you switched to a new card and transferred your balance, make sure that the balance and interest rate are correct on the new account and verify that there is a zero balance on the old account.

4. Pay as much as you can over the minimum monthly payment each month. When you have a high interest rate, the minimum payment will barely cover the interest and your debt will never go down. With a lower interest rate, you'll be paying more towards the actual balance. If you can add more money each month, you debt will shrink more quickly.

Tips & Warnings

• If you open a new low-interest credit card and transfer your balance from another card. don't close the original account. This can hurt your credit score. Instead, keep it open and make one or two purchases each year that you can pay off immediately. This will keep the account open and help keep your credit score higher.

• Do not make a late payment on a credit card account with a low interest rate. Most cards have a clause in your contract that allows them to boost the interest rate if you make even one late payment.

References

• Low interest credit cards