Manage Credit Card Debt: Lower Your Interest Rate

It is estimated that that average household in the US with credit cards carries more than $15,000 in debt.  When coupled with high interest rates and an ability to make minimum payments, it can be difficult to see the light at the end of the tunnel.  According to the Federal Reserve, the average interest rate on a credit card is 12.98 percent, which means that half the population is paying interest rates well above that.  Credit card interest rates of 30% are not heard of for consumers with lower credit scores or a history of missed payments.  But there’s good news.  Several options are available to consumers to lower their interest rates.

Negotiate with your current credit card company:  First of all, find out what interest rate you’re currently paying.  You can find this out in a few ways.  The easiest is to look at your most recent statement.  You can also check your account online if you have one, or call your credit card company and ask.  Once you understand what the current rate is that you’re paying, find out your credit score and find out the average for your range or look at comparable credit card offers.  Armed with this information, call and ask for a reduced interest rate.  Emphasize factors such as the length of your relationship, your positive payment history, and associated accounts.  Demonstrating that you are a good customer will help make your point.  Share the information you’ve found about the average.  Finally, if you aren’t being successful, be willing to state that you will consider taking your business elsewhere.  Also consider asking to speak to a supervisor, as the first-line customer service managers may not have the authority to adjust your rate.

Consider consolidating with a different card:  If you’re unable to reduce your interest rate with your current company, consider consolidating your balance by opening a new account and transferring the balance.  Credit card companies often offer outstanding deals to new customers and allow them to transfer a balance for as low as a 0% APR.  Use credit card aggregation sites such as bankrate.com or creditcard.com, or search direct on your preferred lender’s site to find the best deals.

Ask about a debt consolidation option: If you are carrying a level of debt that far outweighs your ability to repay it, you may want to consider talking to debt repayment company.  Typically, this is how it works.  The company, which should be a non-profit institution, will take control of all your debts.  They will negotiate on your behalf with the debtors, who will in turn lower your interest rate.  Your accounts will be frozen, and you’ll be unable to use them; further, they may be closed at the end of the program.  Each month you will make a combined payment to the consolidation company who will repay the debts on your behalf until your balance is at zero.  Because this can have a negative effect on your credit rating, this should be considered only in situations of very serious debt.