Manage Money

How to Reduce Credit Card Interest Rate

Vikas is fresh out of college and just joined his first company. He heard about the excitement around credit cards and couldn't resist getting one for himself.

As soon as he started using the credit card, however, it got him into trouble. His limited knowledge of credit card usage and how credit card interest works landed him in debt. He got so entangled in the vicious cycle of ever-increasing credit card interest rates that he couldn't find his way out.

Vikas had to ask his parents for help to pull him out of such a messy situation.

As much as financial literacy is required among children, it is vital that the seeming adults also be made aware of the consequences of their financial activities. It is never a great idea to spend carelessly using your credit card, as it is one of the easiest ways to land in a debt trap. Getting out of such a trap can be excruciatingly time-consuming and expensive.

Without any prior financial knowledge, individuals fail to consider the numerous charges that come along with a credit card account.

Understanding the nuances of credit card interest rates can be quite complicated. However, putting an effort to comprehend it can do wonders for you in the future. Among the various factors of managing a credit card, the monthly interest rate is considered to be the most important. This charge is not levied on timely bill payers as much as on  frequent late payers. 

Surprising, right? Well, it is indeed. mymoneykarma is here to provide you with all the tips necessary to reduce your credit card interest rates.

Let's now look at the different ways to do so:

1. Evaluate Your Current Situation

Before jumping the gun, it is essential to review and thoroughly evaluate your prevailing financial situation. Specific information, like knowing your current credit card terms, grace period, statement due date, credit balance, and outstanding, will help you to evaluate your situation better.

Most importantly, don't forget to check your credit score. A good credit score will propel the willingness of credit card companies to attend to your requests.

2. First, Build Your Credit Score

A healthy credit score will help establish your credibility to the credit card company. Therefore, if your credit score is less than optimal, you would have to build your credit health to look more creditworthy.

Keeping your credit utilization rate at 30% or less, or even keeping a positive payment history will boost your chances of getting a lower interest rate.

Note that recurring late payments will also ruin your credit score and increase the chance of denial or cancellation of credit card or loan applications in the future. Reviewing your credit report at least once a year for accuracy would help you to identify errors,giving you a chance to correct them promptly.

3. Venture out for Competitors and Their Rates

Credit card companies and banks are continually hustling to acquire more customers, which gives you the leverage to venture out to find competitive interest rates. Before venturing out, do your research to make an informed decision.

Over the internet, there are quite many tools which can help you compare rates across different lenders to take a better choice. After comparing, you can approach your credit card company to lower your credit card interest rates.

Alternatively, you can also contact mymoneykarma to help you out with finding the right credit card interest rates for you.

4. Call, Greet, and Meet to Lower Rates

Getting your interest rates lowered will definitely help you deal with your financial debt in a better way. Once you have made up your mind, you can negotiate with the bank customer executive to lower your rates.

Calling, greeting, and meeting your bank customer executive can help you to achieve lower credit card interest rates. Besides, a good credit score will always act as an anchor, establishing yourself as a calculated person and diminishing their doubts.

5. Stress on the Solution

Let the representative of your bank know about your issue, be it temporary or permanent. This should help you sort out your credit issues by laying them out in the clear.

However, you would also have to assure the bank executives that you are willing to improve your financial situation, and that lowering the credit card interest rates would help you to deal with the debt quickly.

6.  Speak with the Supervisor

Generally, customer service representatives don't have the power to modify an account or reduce interest rates. However, their direct supervisor will ideally have authority. If you have a solid reason to back your demand, it won't be that difficult to get yourself a lower credit card interest rate.

7. 2Ps - Politeness and Patience

While engaging in discussions to lower your interest rates, try keeping your stress and impatience at bay. Asking questions is not wrong, but keeping your cool and being polite and courteous is key to sealing the deal. On the other hand, being a nasty customer will surely rid you of your chances of lowering the  interest rates.

To Sum Up

Reducing your credit card interest rates will not only help you evade debt but will also help you in sustaining your financial well-being at large. Make sure you follow through on being responsible, though. Checking your credit score can help you keep track of your progress.

The tips given above will come in handy while negotiating for a lower rate with your bank or credit card company. mymoneykarma can further help you find low credit card interest rates that can help you mend your financial crisis.


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