The median average credit card interest rate for March 2024 is 24.37% according to data from Investopedia. Although this technically means this is normal for a large group of Americans, that rate is still pretty high if you’re aiming to pay off your balance monthly.
There are many people who are struggling to keep their balances low.
The average American household owes nearly $8,000/year, per 2022 data from the Federal Reserve Bank of New York and the U.S. Census Bureau.
Credit card balances spiked by nearly $50 billion (4.6%) in the later half of last year and credit card delinquencies rose as well. This is in large part, per New York Fed researchers, because Americans are cash-strapped due to higher prices for everything from groceries and rent to clothing and travel.
Fortunately, there’s a way to curtail interest rate: by just asking.
What to say
If you decide that negotiation may be the route to take for debt management, here’s a quick script to help guide that conversation.
“Hello, my current card is XX and I noticed my interest rate sits at [XX%]. I’ve been with {financial institution} for [X] years and I’d love to remain a loyal customer, but I’ve done some research and saw other banks are offering interest rates around [XX%] for people with my credit score and income level. I’d love to stay, but honestly I’m exploring other offers. Before moving on, I’d love know if there are opportunities here lower my interest rate instead.”
If you’re denied
If your negotiation tactic doesn’t work, you may want to consider transferring your credit card balance to help consolidate debt.
It’s important to consider cards that offer low fees for transfer, like Chase’s Freedom Unlimited card, which offers a rewards rate of 1.5%-6.5% and $0 annual fee.
As NerdWallet points out, it’s best to apply for cards with an introductory 0% APR offer on balance transfers if you don’t already have a credit card with comparable offerings. Keep in mind, you usually have to hold a pretty good credit score (typically, FICO scores of at least 690) to qualify.
Then, work with a rep, or apply online for a balance transfer. Most credit card companies make the process pretty seamless, and often just ask for the same personal information you gave them upon initially applying for a credit card.
Once the balance goes through, make sure you have a plan to keep the utilization balance low, or even aim to completely pay it off by the next statement date.
