How To Lower Your Credit Card Interest Rate

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Debt Management

April 17, 2024

How To Lower Your Credit Card Interest Rate

Your Guide to Negotiating Credit Card Interest: Unlocking Better Rates

Written by

Harper Zhang

Twitter

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Estimated read time:

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Introduction

If you suddenly lost your job or your income dropped, and you can no longer pay your credit card bill, most banks offer some type of hardship program you can join. These programs aim to help individuals in financial difficulty by providing options such as reducing your interest rate to a more manageable level and offering better payment terms. However, there are consequences to consider when negotiating for a lower interest rate.

1. How to Negotiate Your Interest Rate

You can negotiate your interest rate by calling your bank and explaining your financial hardship. Some banks are more receptive to this than others. Here are some tips:

Explain your hardship and why a lower interest rate is necessary to continue making payments.
Highlight your perfect payment history.
Refer to the bank's hardship programs.
If needed, explore debt relief organizations that offer pre-negotiated interest rate reductions.

2. Risks to Consider

While negotiating your interest rate itself won't impact your credit score, there are other risks involved:

Credit Score: Negotiating interest rates will not affect your credit score. However, entering a payment plan where you pay less than what you owe can negatively impact your credit.
Credit Card Closure: Joining a hardship program may lead to the closure of your credit cards with that bank.
Declined for New Cards: After exiting a hardship program, you may face difficulty getting approved for new credit cards from the same bank for at least 12 months.
Alternative Option: Consider applying for a 0% APR balance transfer card with a long introductory period instead of joining a hardship program.

Remember that the best course of action depends on your specific financial situation and goals.

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Struggling to pay your credit card bill? Discover how banks’ hardship programs can lower your interest rates and ease payment terms. Learn negotiation tips and consider the risks before diving in. A guide to smart financial choices in tough times.

Sample Caption
Rating	Credit Score Range	Description
Poor	<580	This credit score is well below the average score of U.S. consumers and demonstrates to lenders that the borrower may be a risk.
Fair	580-669	This credit score is below the average score of U.S. consumers, though many lenders will approve loans with this score.
Good	670-739	This credit score is near or slightly above the average of U.S. consumers and most lenders consider this a good score.
Very Good	740-799	This credit score is above the average of U.S. consumers and demonstrates to lenders that the borrower is very dependable.
Exceptional	800+	This credit score is well above the average score of U.S. consumers and clearly demonstrates to lenders that the borrower is an exceptionally low risk.