Debt, Personal Finance 

How To Lower Your Credit Card Interest Rates

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Living with debt is difficult, but instead of complaining and lamenting, Tricia has taken to blogging about it at her site, Blogging Away Debt, as a way to motivate herself and educate others. When she wrote her latest balance report, I saw that she managed to get the interest rate of her credit card debt lowered from an aggregate of 20% to only 5% – so I asked her if she’d be willing to write about it, and she was. This is a real life experience, not hollow advice written by writers who aren’t in debt but pretending they are, so if you’re dealing with debt, this is the article for you. Want proof it works? Tricia has chopped off over $14,000 in credit card debt in a little over a year.

Jim noticed my post the other day on how much I am paying in finance charges monthly. He asked if I would write an article on how I managed to reduce my finance charges from over $400 to $100. It took about five months to reduce them that far, and here’s how I did it.

1.) Tried calling my credit cards to see if they would lower my interest rates

The first time I tried calling my highest interest rate credit card (16.49%), they wouldn’t lower my interest rate. There were no available special rates for me. It finally did work for me once I started aggressively paying off my debt and I was able to get my rate lowered to 13.9%. Even if you can only shave 1% off of your interest rate, the few minutes it takes to make the call can be worth it. If it doesn’t work the first time, keep calling back monthly.

2.) Paid off as much of our debt as I could

Part of the reason I wasn’t a “good” customer in the eyes of my credit card companies was because my credit cards were almost maxed out. That meant my debt to utilization was almost at the maximum. At the start of my debt reduction journey, I was fortunate to have just started a new position and with that position it meant a higher salary. We kept living the frugal way we had been living and we paid off as much of our debt as we could with leftover income. Extra money from side jobs and our tax refund also went towards our debt.

3.) Worked to increase my credit score

My credit score wasn’t horrible. It was at 711 when I first started my debt reduction journey last year. While the biggest negative factor with my score was the fact I had so much credit utilized, I still made sure that all of my bills were paid on time and I didn’t close any credit lines. Paying bills late and closing credit lines can bring down your score.

4.) Took advantage of balance transfer offers

Every balance transfer that arrived in the mail was carefully scrutinized. How much is the interest rate? How long does the rate last? How much is the balance transfer fee? After getting those key pieces of information, I compared that offer to my current situation. If the balance transfer fee wasn’t too high and the offer lasted long enough (for me it was 6 months), I would shift my debt from card to card. (BFP’s list of cards with 12 month 0% balance transfer offers)

5.) Used my husband’s cards

Between my husband and I, we only have one joint credit card. The rest are either in his name or my name. For the most part, our credit card debt was evenly split. I strategically used one of his cards to take some of the balance from my cards so I could increase my credit score by decreasing my debt to utilization ratio. That helped me obtain a new credit card with a nice “0% interest for 12 months with no balance transfer fee” offer. That card is holding almost $7,000 of our credit card debt at 0%. If you have a spouse, this is definitely something you can
keep in mind when shuffling around debt.

6.) Looked around for other ways to decrease my interest rates

Since I was blogging and learning about finances, I heard about It’s a site where everyday people go to lend and borrow money. With the guidance of another blogger, I decided to list a loan on Prosper to see what happened. At this point, all of my debt was under 9.9% except for $3,500 sitting at 13%. I placed a listing for $3,500 and a week later I had a Prosper loan at a 9.9% interest rate. All of my debt was now under 10%.

And that is where my debt stands today. All of it is under 10% and a majority of the debt is at 5.9% and 0%. Jim did a rough calculation and figured out that I’m “only paying around 5% in interest to service $25,000 in essentially unsecured debt.”

While I am pleased at my overall interest rate, I am always on the lookout for better interest rate offers. In the meantime I am still paying off more debt and working to raise my credit score. Paying less in finance charges means more of my payments are going towards my principal balances 😉

{ 8 comments, please add your thoughts now! }

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8 Responses to “How To Lower Your Credit Card Interest Rates”

  1. 5% for $25,000 of unsecured debt is pretty fantastic. It’s almost at the point where if you could borrow more money at that rate you could make out by putting it in a high interest bank account. Simply amazing considering where you started.

  2. Tim says:

    credit card companies are getting harder to deal with these days, and many won’t discuss anything unless you go through a consumer credit counselor company. although not for everyone, going through a credit counselor may be the best option. just know that you will not be able to get credit during the period. also note that some companies like amex, will count your account as a charge off. the plus side is that you will more than likely get 0% interest on much of your debt. although contrary to the program, you should keep a long standing credit card open just to have it when you pay things off. this one should be one that wasn’t late.

  3. Mission Debt Freedom says:

    This was excellent advice on reducing interest rates to make those payoff dollars work even harder. Tricia has made excellent progress…I frequent her blog daily!

  4. Gus says:

    Good advice. I found some similar info about credit card interest rates on and

  5. Dan says:

    I’ve been using Prosper for a few weeks now and have an average loan rate of 13%. So far, so good, a few of the loans are paying already. I’m posting my findings, strategies and lessons learned on my finance blog. Enjoy!

  6. Jean Goonewardene says:

    I was wondering if its okay to shift my debt from one card to another (low interest cards) will it reflect badly on my credit scores?

  7. jim says:

    Shifting debt should not affect your score. However, if you are applying for a new card (to a low interest card), the inquiry will have an affect on your score. It’s hard to say how much of an effect since you’ll have one extra credit pull but, if the application is approved, you’ll have a higher total credit limit and a lower % used. It might be a wash, it might not be, since no one knows the black magic of FICO with 100% accuracy, it’s difficult to say.

  8. Daniel Stille says:

    I literally just got off the phone with my credit card company and they lowered my rate from 19.5% to 10.9%. At first they were going to lower it to 12.9% with a $35/year fee, which still would have been better, but when I asked if they could wave the fee, they said they could lower it to 10.9% with no fees permanently.
    So thank you for the advice, it actually works!!

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