How to lower your interest rate

By Beth Sweeney - email

It's a growing trend in this tough economy.

More Americans are finding themselves deep in credit card debt and higher interest rates.

However, those rates don't have to stay at sky high levels.

A little relief just may be a phone call away.

According to Card Web, the average American has a credit card balance of nearly $10,000.

A substantial part of that balance could be from a high annual percentage rate.

In fact, several credit card companies have raised interest rates this year as high as 28%.

The owners of Knit Witts and Pen Pals in Evansville say that could be the reason they've seen a drastic decline in credit card sales.

"Although it's early in the season, we've noticed that while we were having about 88 to 91% of our people using credit cards, that probably 25 to 30% of them are now using cash and checks," said owner Kris Proctor.

How can you get that rate back down again?

Why not just ask?

Jan Simpson agreed to read our script to her credit card company's customer service representative over the phone.

Within a couple of minutes, the issuer lowered her rate from 17 to 14%.

"I didn't think you'd be able to do that," said Simpson.

A few percentage points can make a big difference.

If you have a balance of $10,000 and you make a minimum payment of $200 a month at a 19% interest rate, it will take you 97 months to pay it off.

That's more than eight years.

If the interest rate drops to 15%, you can pay the card off 19 months earlier, saving almost $3,800.

"The credit companies aren't going to call you and offer a lower rate, so the first step in helping yourself would be to make that initial call and at least ask and see if it can be done," said Tony Salpietra with Achieve CCA in Evansville.

Financial experts say with so much competition in the credit card industry, your card issuer will try to keep you satisfied if you're a good customer.

Salpietra says you have nothing to lose when asking for a lower rate.

Financial experts say to be successful at lowering your card rate, always pay your bill on time.

One late payment can result in a large interest rate hike.

When you can, pay more than the minimum balance due.

If your card issuer won't budge on the rate, financial experts say it may be time to start looking for a better deal.

Here's the script credit card customers read to their issuers:

"I'm a good customer, but I received some offers in the mail from other companies with lower percentage rates. I was really wanting to lower the rate on my card, can you help me?"