5 Clever Ways to Lower Your Credit Card APR (That Actually Work)


In addition to impacting your credit score, having a high balance on your credit cards can also expose you to high interest charges. Credit card interest rates are usually expressed with an annual percentage rate (APR), including interest and fees, for borrowing money. In some cases, your APR can reach 24% or more, depending on your credit card.

Here are five legit and effective ways to lower your credit card APR (and hopefully increase your bank account).

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1. Negotiate your rate

If you think your APR is too high, lowering it could be as simple as asking. If your financial institution agrees to lower your rate simply because you asked for it, you’ve saved money in interest charges with little or no effort.

Keep in mind that it won’t always turn out this way. It is important to prepare for a negotiation with your bank by knowing the ins and outs of your financial situation.

It also wouldn’t hurt to have some data on hand to justify why you deserve a lower APR. This could include your on-time payment history and how long you have been a cardholder. If the rep you’re talking to still won’t budge, call back and talk to someone else. Sometimes it all depends on the person on the other end of the line.

2. Compare card offers

It might also make sense to restart entirely with a different credit card. If you know you’re going to have a balance on your card due to upcoming large purchases, a new credit card with a lower interest rate could save you money.

Start by comparing credit cards to see what you might qualify for. It’s possible you’ll find one with a lower APR than you currently have. You’ll still have to pay off your existing card balance, but any new purchases could be allocated to the card with the lowest interest rate and save you money in the long run.

If you want to ditch your old card altogether, you’ll usually need to get a balance transfer card to take advantage of lower interest rates. Keep in mind that canceling a credit card could negatively impact your credit score, as it will reduce the overall age of your credit accounts.

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3. Transfer your balance to a new card

It might be worth spending your time and research comparing credit card offers and finding a card with an introductory balance transfer offer. A balance transfer involves transferring your balance from one credit card to another. There are often fees to complete a balance transfer, which can vary between 3% and 5% of the transferred amount.

Many of the best balance transfer credit cards offer a 0% upfront APR on balance transfers for a limited time, usually between 15 and 18 months. Depending on your situation, it might be worth paying the balance transfer fee to avoid paying interest on your balance during the 0% introductory offer period.

This strategy could give you enough time to fully pay off your balance or at least make progress without having to worry about interest charges. If you want as much time as possible to avoid paying interest by doing a balance transfer, consider the longest running balance transfer credit cards.

4. Improve your credit score

A low APR credit card will likely save you money on interest. But consider the position of your financial institution for a second and why you might have a high APR in the first place.

Lenders are in the business of giving people money on the assumption that it will be repaid. It is a risky business as they basically trust customers to refund their money on set terms. One of the ways a bank can estimate how risky it will be to lend you money is by checking your credit score and other related factors.

If you have a high credit score, you might get a lower APR. Conversely, lower credit scores generally get higher APRs. To help you improve your credit score and potentially benefit from lower interest rates, apply these financial strategies:

  • Always make payments on time

  • Don’t keep a high balance

  • Don’t close your oldest credit accounts

  • Don’t open too many new accounts

  • Use different types of credit

6 surprisingly simple actions to increase your credit

5. Apply for a debt consolidation loan

Similar to transferring your balance, consolidating your debts with a debt consolidation loan could help lower your overall APR and save you money on interest. The difference is that debt consolidation can work for multiple balances at once, while a balance transfer only works for one balance at a time.

For example, let’s say you have three credit cards with high balances. You can use a debt consolidation loan to pay off all three cards and then have one larger monthly payment. This might make sense if you end up with a lower overall APR than before. However, it wouldn’t make sense if you couldn’t find good options from lenders when shopping around.

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At the end of the line

If you need to carry a balance on a credit card, it makes sense to try to save money on interest. From simply calling your financial institution to negotiate a better rate to using a balance transfer credit card, the right strategy will depend on your situation. You have a few options for getting out of debt.

Although credit cards are famous for their high interest rates, some allow you to avoid paying interest for a certain period of time. If you’re planning on making a big purchase, check out our review of the best 0% APR credit cards.

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This article 5 Clever Ways to Lower Your Credit Card APR (That Actually Work) was originally published on FinanceBuzz.


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