What’s an Average Credit Card Interest Rate? (And How to Get a Lower One)

How to Get a Lower Credit Card Interest Rate

How to reduce your credit card interest rate? That is the question.

One of the problems with credit cards is that the interest rates can result in expensive fees. According to Bankrate.com, the national average for credit card interest rates on November 29, 2012 was 14.02% for a fixed rate loan and 14.58% for a variable rate loan.

When you consider that many cards compound interest on the average daily balance, you can see how carrying a high balance can get expensive. And, if you are trying to pay down your debt, it can be difficult to make progress when a big portion of your monthly payment goes toward interest, rather than reducing the principal. That’s why it is important to try to reduce your interest rate.

Factors That Determine Your Interest Rate

However, the interest rate you end up with isn’t just about the national average. What rate you pay depends on the issuer, and on your credit score. When you apply for a credit card, the issuer looks at your score and determines which interest you will end up with. The better your credit score, the lower your interest rate.

Many credit card issuers feature three different tiers: Fair, Good, and Excellent. Others just offer two tiers, one for those with excellent credit, and another for those with less than excellent credit. You can look at the information located in the box of terms to find out what interest rates are available at different credit score levels.

In general, though, you can expect to get an interest rate of between 9.99% and 13.99% if you have excellent credit, which includes a score of at least 720. Realize, too, that you might need excellent credit just to qualify for some of the better cards, particularly credit cards with a generous rewards program.

If you have good credit, such as a score between 680 and 719, you can usually qualify for a card with an interest rate of between 13.99% and 19.99%. Finally, if you have fair credit, which is a score of between 620 and 679, you will probably have an interest rate of 21.99% or 22.99%.

If you have a score of less than 620, you will likely have a hard time qualifying, and you might pay a rate of up to 36% if you can find a subprime credit card.

Keep in mind, though, that these are general ranges, and that what interest rate you actually end up with depends largely on the issuer, and the rates offered on different credit cards.

So… How To Get a Lower Credit Card Interest Rate?

One of the most common ways to lower your interest rate is to call and ask for a better rate. In order to get a lower rate, though, you generally have to meet a few requirements:

  • Be a credit card customer in good standing. You shouldn’t have missed payments, or paid late.
  • Be a long-time customer. It helps if you have been a customer for at least a year or so.
  • Show improvement in your credit score. If you have worked to better your credit score, you are more likely to get the lower rate you ask for.
  • Threaten to transfer your balance. If you have another card to fall back on, and can make good on your threat, you can mention that you will transfer your balance and close your account. Many credit card issuers would rather keep earning interest from you at a lower rate than give up the source of income altogether.

Many credit card issuers give representatives the ability to lower your interest rate 1% to 3% if you are a good customer that simply asks. You can also speak with someone higher up if you need to.

Before you call, though, make sure you have a backup plan in place. You have to be able to move your money around if some sort of compromise isn’t reached. And really, if you aren’t able to get a lower rate with your current company then it may be worth looking around for a better rate from another company anyway. Reducing your interest rate can help your finances a lot.

Just remember, no interest rate – no matter how low – is a reason to continue carrying credit card debt! If you haven’t already signed up for ReadyForZero then sign up and get started on paying off your credit card debt.

Let us know any questions you have in the comments below and we’ll try to answer them!

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  • Another factor to contributes to your value as a customer is the amount you spend. Each dollar spent generates interchange revenue for the bank.

    This differs from your balance amount that is revolved – the balance you carry month to month. The balance you revolve is multiplied by your interest rate to determine the interest charges you pay.

    Banks are more likely to agree to a rate concession if you generate more interchange revenue.

    • Right! In other words, if you spend a lot (regardless of whether you pay it back in full each month) you are generating revenues for the bank and they will want to retain you as a customer. Thanks for pointing that out, Kevin!