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How to Lower the Interest Rate on Your Credit Cards

The average credit card interest rate is just above 14 percent. But averages can be misleading. Actual credit card interest rates range from a low of 0% up to whopping 40% or more. Given the disparity in credit card interest rates it pays to be proactive and try and lower the interest rates on your credit cards.

The first step in reducing the interest rates on your credit cards is to know what rates you are currently paying. You can easily find this information on your card statements. Regardless of the rates you are paying (unless they are 0%), there are steps you can take to lower your rates. To get you started we have specific ways you can reduce your credit card rates.

Ask For A Lower Rate

Believe it or not, credit card companies lower rates all the time. But in most cases, to get your rate lowered you have to ask. In a 2002 report, the Massachusetts Public Interest Research Group found the following: "More than half of consumers who called their credit card company to complain about their high annual interest rates were successful in reducing those rates by an average of one-third." Here are some of the specific findings in the report:

- With one 5-minute phone call, 56 percent of consumers who called their credit card company lowered their APRs.

- Those who were successful reduced their APRs by an average of more than one-third, from an average of 16 percent to an average of 10.47 percent.

- Factors improving the caller's success rate included a longer length of time with a particular card, a low unpaid balance compared to credit limit (being less "maxed out"), and a history of no late payments.

In short, you stand a good chance of getting your rate lowered just by asking. When calling your card company, the best approach is to keep your request direct and simple. Keep in mind that representatives get this type of request all of the time, and they are trained to handle the request in a specific way. And if you are not happy with their response, ask to speak to their supervisor. There's no reason to get emotional. Just be determined. While you won't always come away with a lower rate, it's worth a 5-minute investment of your time.

Take Advantage of A Balance Transfer

One of the easiest ways to lower your rate is to do a balance transfer to a card with a lower rate. There are numerous cards that offer 0% on balance transfers for 12 months or more. There are two approaches you can take with balance transfers:

- Go for the longest 0% offer: Today, the longest 0% offers are for 18 or 21 months. The longest offer comes from the Citi Platinum MasterCard, which offers 0% for 21 months. The Discover More Card has a 0% offer for 18 months.

- Go for no fee balance transfers: There are two offers available today that don't charge transfers fees. Both the Discover More Card No Balance Transfer Fee and the No Fee Slate from Chase offer 0% for 12 months with no balance transfer fee.

If you aren't in a situation where you can apply for a new offer and get approved, then consider using a card you already have. For example, check the offers on your current cards. You might find you already have a card that offers a special rate for balance transfers.

Improve Your Credit Score

A higher credit score means a lower rates for you. For example, most of the popular cards today have interest rates that range from about 10% to 20%. A high credit score will net you the 10% rate, while a low score results in a rate twice as high.

If you currently have a card with a high rate as a result of your credit score, you can turn that around. First, you want to do whatever you can to raise your credit score. You can quickly see an improvement in your credit score just by paying down your existing debt. Once you see your credit score rising, it's a good time to either apply for card with a lower rate or ask your current card company to lower your existing rate as we discussed above.