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4 Things That May Help Lower Your Credit Card Interest Rate

by Francine Huff

It seems like very time you turn around there is another report about credit card companies raising interest rates. While many consumers have found themselves paying more more credit card during this recession, there are people who have managed to snag lower interest rates. Here are some tips to help you lower credit card interest rates.

  1. You must pay your credit card bills on time. Being late with payments or missing them altogether gives you you no negotiating power when you ask for a lower rate. If you have a long history of making your monthly payments by the deadline, this will show your credit card company that you are a reliable customer.
  2. Your credit score absolutely matters. Most lenders use FICO scores, which you can purchase at myfico.com, when deciding whether to extend credit to you and at what interest rate. If you haven't gotten a copy of your credit report lately do it today. Visit www.annualcreditreport.com to request a free copy of your report from Experian, Equifax, or TransUnion. Review the report to make sure all information is correct and up-to-date. Dispute any problems you see by contacting creditors by phone and by mail.
  3. Do not use up too much of your credit line. Credit card companies frown upon customers using too much of their existing credit line. You'll have a better chance of getting your interest rate lowered if you can keep your debt to limit ratio at 30% or less of your credit line. For example, if you have a credit line of $20,000, you would want to keep your outstanding balance below $6,000 to avoid being seen as a credit risk.
  4. Use low interest rate balance transfers. This can help you lower your interest rate and monthly payments for a period of time. But keep in mind that once the initial teaser rate ends your interest rate will jump. Also, if you are late with a monthly payment during the teaser rate period, your rate will rise to the default rate. Be sure to read through all the terms of any balance transfer offer you are considering.

Recent changes in the law now require credit card companies to give you 45 days notice of any major changes in the terms associated with your credit card. So you must have adequate time to decide whether you want to opt out of any rate increases and just pay off the account.

Published 12/17/10

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