How to Negotiate Lower Interest Rates

Credit cards, while undoubtedly convenient, can also serve to put people in debt. When you are constantly charging without thought to how you might pay back the balance, you might find yourself in more debt than you can handle, which is a problem people face every day. One of the reasons why credit cards are so difficult to pay back is the high interest rates that are often charged, some as high as 26%. Even if you pay the minimum payment every month, it will be years before you can pay off the balance. So here are a few tips on how to negotiate lower interest rates.

How to Negotiate Lower Interest Rates: Evaluate Your Payment History
Credit card representatives will be much more likely to listen to your pleas if you have stayed current in all of your payments. They want to keep customers who carry a balance, but also who make their minimum payments on time. If you have gotten behind or if you have paid late several times, trying to negotiate lower interest rates might not work very well in your favor. However, if you have been vigilant about paying your minimum payment, then you have a good chance of succeeding.

How to Negotiate Lower Interest Rates: Explain Your Situation
Have your credit card statement in front of you, and explain that you have gotten in over your head. Tell the company representative that you are more than willing to pay off your debt, but that it simply isn't possible at the current interest rate. Remind them that you always pay on time and that they have no reason to believe that you would stop paying them, and that you believe as a valuable customer that you deserve a lower interest rate.

How to Negotiate Lower Interest Rates: Bring Up the Competition
Credit card companies are forever in competition with one another, which gives you a little bit of leverage. While you shouldn't threaten the company representative, you can gently remind him or her that you can take your business elsewhere. Explain that you've been offered a much lower interest rate with another company and that they don't charge interest on balance transfers. This will give you yet another bargaining chip in attempting to negotiate lower interest rates.

How to Negotiate Lower Interest Rates: Throw Out a Number
Don't wait for the representative to make you an offer; instead, throw one out. For example, let's say that your current interest rate is a variable 15.9%. Explain that you want a fixed interest rate of 10%, or you can try for even lower. Currently, prime is around 8.5%, so you probably won't get any lower than that.

How to Negotiate Lower Interest Rates: Don't Mention Bankruptcy
Even if you believe that bankruptcy might be your only option, don't threaten the credit card company with it. They won't take kindly to the fact that you might be stiffing them for the entirety of your balance through Chapter 13, and your bargaining chips will be wiped off the table. Instead, be polite and explain that you simply believe you deserve a lower interest rate, and that you would be happy to continue as their customer if they are willing to comply.

How to Negotiate Lower Interest Rates: Shop Around
If your credit card company is unwilling to compromise, take your business elsewhere. In this brave new world of rare customer service, you don't have to work with a company that isn't willing to work with you. In fact, you don't need credit cards at all. Pay off your balance and start using your debit card, your check book and cash. It will keep you debt free and will save you the headache you're experiencing now.