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How To Lower The APR On A Credit Card

How To Lower The APR On A Credit Card

Excessive credit card debt can be difficult to pay off even in the best of times but it is often made even more difficult when there is a high interest rate. Most credit cards nowadays have variable interest rates which fluctuate with market rates so the interest rate you're paying today may wind up being lower tomorrow. However, credit card companies have no incentive to lower the APR automatically for you so as a consumer it is best to know what you're currently paying and be proactive by contacting the credit card company and requesting a lower interest rate.

As with any negotiation it is best to go in as well informed as possible to support your position and to increase your odds of getting what you want. Responsible consumers with good credit histories stand a better chance of receiving a lower interest rate when they contact the credit card company. Responsible is defined by those individuals who consistently made minimum or more monthly payments on time for a period of 24 to 36 months. Any kind of late payments or payments below the minimum amount will be considered a black mark and adversely affect your ability to receive a lower APR. Be sure to get your free annual credit report as provided under law and thoroughly review your credit history prior to contacting your credit card company.

Competition is the hallmark of a free-market economy and will often work in the consumer's best interest by forcing similar companies to compete for a limited customer base. Use competition to your advantage when contacting your credit card lender by first checking out what interest rates are being charged by competing issuers. It is a common negotiation tactic to pit businesses against each other. Sometimes merely the hint of losing a customer will be enough to receive a lower interest rate on your credit card. Be sure to only compare credit cards offering similar features such as no annual fee or cash back offers.

Once you are prepared to speak with customer service call the 1 800 number located on the back of your credit card and get ready to negotiate. Very politely state your case and then ask the representative if there's anything they can do regarding lowering your APR. Sometimes that's all it will take and before you know it your interest rate will go from 15.9% to 8.9% in one fell swoop. If this doesn't happen however be prepared to ask for a supervisor and state your case again. If the supervisor is unable or unwilling to lower your interest rate it may be required for you to consider closing your credit card at which point they may send you to the retention department. Credit card retention departments have significantly more latitude in what they can do with fees and interest rates to keep customers happy.

One of the key aspects that most credit card users do not consider when requesting lower interest rates is that some customers are more profitable than others for credit card companies. If you're the type of credit card customer who pays their balance in full each month then you will have less leverage when requesting lower interest rate. This is because the credit card issuer doesn't make any money from interest applied to a balance but the account still cost money to maintain. Those credit card users who carry a balance from month to month and pay hundreds of dollars in interest a year are more likely to receive lower interest rates. The credit card company would rather collect something rather than nothing at all if you close the account or transfer the balance. Keep this in mind when requesting a lower APR because under certain circumstances a credit card issuer may be more than happy to close your account and see you go.

If however you're successful in obtaining a lower interest rate on your credit card thank the customer service representative for their time, verify the new interest rate and double check that the new interest rate is applied when you receive your next monthly statement. Always keep in mind that as the consumer you have the power when dealing with credit card companies or any other business. If you don't like your current interest rate or if they are unable or unwilling to lower it you can always take your business elsewhere by transferring the balance to a different credit card issuer. Don't take no for an answer and be ready to move on if you need to.