Credit card debt can be easy to accumulate but tough to pay down, as many credit cards charge high interest rates and fees to your revolving debt. One strategy for tackling your debt is to lower your interest rate, so that the debt doesn’t keep growing back. Here are three ways you might be able to lower the interest rate on your credit card debt.
1. Try to negotiate with your card issuer
If you would prefer to keep your current credit card, it may be possible to negotiate a lower interest rate from your card issuer. If you want to go this route, you’ll need a history of timely payments to demonstrate your value as a customer.
You may also want to gather any competitor offers you’ve received in the mail or online — if you prequalified for a credit card with a lower APR from someone else, that can be a great way to demonstrate why a lower interest rate would be fair. If your credit score has improved, that should also work in your favor.
If you’re not getting anywhere, another strategy is to ask for a temporary reduction in your rate, for a limited time period of several months to a year. Card issuers may be more amenable to this, especially during the widespread financial hardship of the pandemic.
2. Look for a balance transfer offer
A balance transfer is when you move credit card debt from one card to another. You can save money by using a balance transfer wisely, either by using a credit card that offers an introductory low interest rate on balance transfers or with low interest credit cards that have an ongoing low APR.
When doing a balance transfer to a card with a balance transfer offer, it’s important to take advantage of the introductory APR to pay down your debt as much as possible. If you don’t believe that you can pay down your debt within that window, this may not be the best strategy to use, as the ongoing APR of most balance transfer credit cards is higher than a regular low interest credit card.
It’s also important to note that balance transfers have an associated fee. Make sure you won’t pay more with the balance transfer fee than you would in interest over the same time period!
3. Consider a personal loan
Another way to consolidate credit card debt is by taking out a personal loan in an amount that will cover all or most of your debt. Personal loans tend to have much lower interest rates than credit cards, meaning you’ll save money over the course of repaying your total debt.
The primary drawback of personal loans is that they may be hard to qualify for, requiring a good credit score as well as steady proof of income. If you don’t meet the standards alone, consider if you might be able to find a cosigner, such as your spouse, who can help you qualify. However, remember that cosigning a loan is a serious financial burden, so it may help to approach your potential cosigner with a concrete plan about how you’ll repay the loan in a timely manner.