Vision Credit Education, Inc.

Anyone paying high interest rates on credit cards knows that only a small fraction of their minimum payment goes toward the card balance. Furthermore, those higher finance charges also mean a higher minimum payment. So is it true that you can request lower interest rates from your credit card issuers?

Of course you can ask, but will your credit card issuers actually lower your rate? The answer is, it depends. Their policies, your credit and your payment history will determine how much bargaining power you have in your interest rates.

If you have good credit and have routinely sent in higher than minimum payments, then you have a good chance to receive a drop of 2-3 percentage points. That may not sound like much if your rate is 16% or higher, but it can reduce your finance charges by a fair amount each month.

Getting a lower interest rate can increase the amount of your payment that goes toward the principal balance as long as you keep making higher payments. If you choose to stick with the minimum payment, that amount will be lower once your interest rate is reduced on that credit card.

Asking Them

There is no harm in asking. You should arm yourself with any other pre-approved credit card offers that you receive. Quote them permanent lower rates as well as the promotional rates promised by other credit card issuers. It especially helps if they think that you are prepared to transfer your balance to another credit card unless they lower your interest rate.

If you have recorded a late payment with that credit card issuer or failed to pay more than the minimum payment, it is likely that your request could be denied. The reason is that credit card issuers will continue to charge higher interest rates if they believe you are a higher risk.

What if They Say No

If your higher credit card interest rates are causing you difficulty in meeting the higher minimum payments, then you might find that it is time to speak with an Accredited Financial Counselor at a nonprofit crediit counseling organization. They can help you determine whether you can get back on track with a new strategy.

It is possible that you can reduce your interest rates on your own using a few tips from your counselor. If your situation is more dire, then you might ask them if they administer a debt management program. You can often get lower interest rates through such a program when your credit and financial situation are under duress.

To determine what your options are, you should first start by asking your credit card issuers for lower interest rates on all of your credit cards. If you haven’t been paying more than the minimums, you need to start right away, since many credit card issuers want to see multiple higher payments in a row in order to grant lower interest rates.

If you receive a lower interest rate, don’t stop there. Chances are that if you keep making higher monthly payments, you may request and receive another interest rate reduction in a few months. You just have to ask them again.

If you are denied, then it might be time to ask for help. Waiting until it is too late can limit your options and worsen your financial situation while destroying your credit.

Find an organization that is reputable that can give you the help that you need. Insist on a nonprofit credit counseling organization that is an IRS-approved tax-exempt charity. Whether you seek help from our organization or from another nonprofit organization, you will know that your best interests will come first.

For more information on steps you can take to get control of finance charges, visit our section to learn how to reduce interest on your credit cards. There you may learn more about options that could result in lower interest rates as well as methods for receiving interest rate reductions.