Will Credit Card Companies Lower My Interest Rate if I Ask?
Some credit card companies may lower your rate if you ask. Which can be a good thing given that the current average interest rate is currently hovering over 20%. Getting that “yes” answer could be a simple way to shave money off your bill if you don’t pay the balance in full every month.
Given that it can’t hurt to ask, read on to learn more about this topic, including tips for requesting a lower credit card interest rate.
How to Lower Your Credit Card Interest Rate
First, a bit of vocabulary. Your credit card interest rate is also called an annual percentage rate, or APR. Credit card APRs vary across cards and cardholders. The APR that you currently have on your credit card is not set in stone.
It is often possible to lower your credit card interest rate. To do so, you will need to contact your credit card issuer directly. Although the credit card issuer is not required or guaranteed to agree to lower your APR, it is likely worth the time and effort to try. The worst that can happen is they say no, right?
Plus, you might be pleasantly surprised to learn that they can decrease the interest rate a bit. For instance, if you let them know you are shopping for a better rate elsewhere, they might lower your rate a bit to keep your business.
Why Try to Get Your Rate Lowered
If you carry a balance on your credit card, you have to pay the interest on your balance. If you have a high interest rate, it can make it more difficult to get out of debt if you get behind on the payments.
When you make payments on a card with a high interest rate, more of the money will go toward interest, which means it will take longer to pay off the actual balance amount.
Trying to get your rate lowered is actually easier than it may seem. There is no risk to trying, so if you carry a balance on your card, you might as well try to see if you can get your rate lowered.
What Is a Good Interest Rate on a Credit Card?
You have to qualify for the interest rate on a credit card. The credit card interest rate that you wind up with can depend on your credit score, market conditions and the credit card issuer. The average credit card interest rate as of November 2023 according to the Federal Reserve was 22.75%.
Some might say that a good interest rate on a credit card is anything other than that figure. Others might have a particular lower number in mind that they saw advertised by a given financial institution.
Rates change, so it can be smart to check the prevailing percentages before you talk to your card issuer, so you can negotiate more effectively. You may find some promotional credit card interest rates being offered in some cases.
Understanding Your Credit Card Company
While it may seem counterintuitive from how consumers feel, your credit card company may prefer customers who carry a large balance, as opposed to someone who is avoiding interest on credit cards by paying their balance in full every month.
Credit card companies make the most profit from charging interest to people with unpaid balances. If you are one of those people, your card issuer probably doesn’t want to lose you or your balance. This may give you a little leverage for negotiating your APR.
It is also important to know that while credit card companies can agree to lower your APR if you ask, they can also increase your APR for certain reasons.
If you are often late on payments, your rate can be hiked up. The credit card company must give you 45 days of advance notice before doing this.
Credit card companies are usually not allowed to increase your interest rate on new transactions during the first year of your credit card account, but they can do so after the first year.
How to Negotiate a Lower APR
Learning how to lower APR on your credit card involves learning how to negotiate with your card issuer. To do this, you just need to assess your situation and ask the right person at the credit card company. Here are tips.
Assess Your Situation
Before you approach your card issuer, you should assess your own situation and decide what your goal is. If you have a decent credit score, you may be able to collect competing offers with lower interest rates to bring to your credit card issuer. This may include cards that have credit card promotional interest rates, like balance transfer credit card offers or intro 0% APR offers.
Ask the Right Person
Next, call the customer service number on the back of your credit card. Once you are speaking with a live person on the phone, explain your situation. Tell them about the other offers for lower APRs from other credit card companies, but you would prefer to stick with your current company.
If the customer service representative that you are speaking with says that a lower rate isn’t possible, ask to speak to their supervisor. If they don’t comply with that request, you might hang up and call back again.
What to Do After a Decision
If you were able to get your APR lowered, congratulations. Now, there are a few next steps to take.
First, get the credit card issuer’s agreement to lower your rate and the related fine print in writing. Have them mail or email you it.
Be sure to read the fine print to understand any conditions that come with the offer. If you have a credit card payment delay or don’t keep your balance under the credit limit, the card issue may be able to raise your APR to the previous rate or an even higher rate.
Knowing what can increase credit card APR is important in this instance. Do educate yourself on this topic.
Also, consider using the money that you save on interest toward reducing your credit card debt or other debt. By continuing to make payments in the same amount you were making before your rate was reduced, you can work to reduce debt and improve your overall financial situation.
If you were not able to get your APR lowered, you can ask your card issuer about their procedures for rate reduction. There may be a time period for consideration or reconsideration. Or you could look into balance transfer promotions with another company.
Credit Card Tips
If you have a credit card, you should have a general understanding of some of the credit card rules.
Honor your bill’s due date with at least the minimum payment. On-time payments are the single biggest contributor to your credit score.
One of the most important is to only spend what you can afford, and pay your balance in full each month if you are able to. That way, you won’t even have to worry about the APR.
If that’s not possible, keep an eye on your credit utilization ratio, or the percentage of your credit limit that you have accrued. If this figure gets too high, it can negatively impact your credit score.
Also take steps if your balance is getting too high. You could look into balance transfer cards, a personal loan to pay off your credit card, or working with a nonprofit debt counselor.
The Takeaway
It is possible (but not guaranteed) to get your credit card company to lower the interest rate on your credit card if you ask. When speaking to a representative, be courteous, come armed with information about prevailing interest rates and other offers, and ask to speak to a supervisor if necessary. A lower APR on your credit card can save you a lot of money if you carry a balance, so it can be worth the time and effort.
This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
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The Average Credit Card Debt by State
Millions of Americans continue to struggle with credit card debt. The average credit card debt in America is $5,982 as of July 2023, according to a new report from TransUnion®.Out of the 50 states, Alaska has the highest average credit card debt ($7,394), while Wisconsin has the lowest average ($4,843), data show.More than 6 million cardholders are at least 30 days past due on a minimum payment, according to TransUnion’s credit card delinquency data.Your credit card balance is your credit card debt. Making transactions on your credit card is a liability that eventually needs to be repaid. Below we highlight the average credit card debt in all 50 states and explain why making minimum payments each billing cycle may not be right for you.
Damir Khabirov / iStock
Consumer credit card debt in the United States exceeds $1 trillion as of the second quarter (Q2) of 2023, according to the Federal Reserve Bank of New York.The average American credit card debt increased to $5,982 in July 2023 (it was $5,932 in June 2023 and $5,350 in July 2022), according to TransUnion, a nationwide credit bureau.Credit card debt can be costly if you’re paying interest charges. The average interest rate on credit cards is 22.16% as of Q2 2023, according to preliminary Federal Reserve data on credit card accounts assessed interest. (Learn more atHow Many Credit Cards Should I Have?).
TransUnion publishes U.S. credit card debt data every month in all 50 states and the District of Columbia. We’re tracking the data as it becomes available and then ranking the average credit card debt by state in descending order using TransUnion’s recent industry snapshot (July 2023):
The nation’s capital is not a state, but the District of Columbia has one of the highest average credit card debt balances in the United States. The average credit card debt in Washington, D.C., stands at $7,022 per consumer as of July.
Alaska is the largest state in the country in terms of its geographical boundaries (586,412 square miles). It also leads all 50 states with the highest average credit card debt in the nation. Cardholders in Alaska have an average credit card balance of $7,394 as of July.
Hawaii sports tropical climate and active volcanoes. This state of islands in the Pacific is also known for its relatively high average credit card debt. Consumers in the Aloha State have an average credit card balance of $6,720 as of July.
Maryland sits south of the Mason-Dixon line. This Old Line State has a relatively high credit card debt in the USA. The average credit card debt in Maryland stands at $6,650 per consumer as of July.
Nevada may have some issues with gambling debt. This predominantly desert and semiarid state also ranks high in credit card debt. The average credit card debt in Nevada is $6,529 per consumer as of July.
New Jersey is the most densely populated state in the United States. The Garden State also has a high average credit card debt. Cardholders in New Jersey have an average credit card balance of $6,526 as of July.
Virginia enjoys close proximity to the nation’s capital in a region locally nicknamed DMV (District of Columbia, Maryland, and Virginia). Similar to Maryland and Washington, D.C., consumers in the Old Dominion state carry a relatively high average credit card debt in America. Virginia’s average credit card debt stands at $6,523 per consumer as of July.
Colorado hosts a large stretch of the Rocky Mountains. The Centennial State also hosts a large amount of credit card debt per consumer. The average credit card debt in Colorado is $6,450 per cardholder as of July.
Texas is one of the largest states in the nation in terms of its geographical boundaries and population. The Lone Star State also has a relatively high average credit card debt in the U.S. The average credit card debt in Texas is $6,397 per consumer as of July.
Nicknamed the Constitution State, Connecticut has the highest average credit card debt in New England. What is the average credit card debt in Connecticut? It’s $6,386 per consumer as of July.
California is the most populous state in the nation with more than 38.9 million people as of Jan. 1, 2023. The Golden State also has one of the highest amounts of credit card debt per consumer. The average credit card debt in California is $6,368 per cardholder as of July.
Georgia produces tons of agricultural goods, but the Peach State also has a relatively high level of credit card debt. The average credit card debt in Georgia is $6,347 per consumer as of July.
Florida is one of the largest states in the nation in terms of population and economic activity. The Sunshine State has more than 22 million residents and a gross domestic product (GDP) of nearly $1.4 trillion as of 2022. The average credit card debt in Florida is $6,336 per consumer as of July.
Washington state borders the Canadian province of British Columbia and carries a relatively high amount of credit card debt per consumer. The average credit card debt in Washington is $6,331 per cardholder as of July.
New York remains one of the largest states in the nation despite its recent decline in population. The average credit card debt in New York is $6,224 per consumer as of July.
Arizona welcomes domestic and international tourism with its Grand Canyon natural landmark and desert climate. The average credit card debt in Arizona is $6,083 per consumer as of July.
Delaware is a relatively small state in terms of its geographical boundaries and population. The First State, however, is one of the bigger states in terms of average credit card debt. The average credit card debt in Delaware is $6,044 per consumer as of July.
Wyoming has the smallest population in the nation (fewer than 600,000 people). But this Mountain West state has a relatively high amount of credit card debt per consumer. The average credit card debt in Wyoming is $5,931 per cardholder as of July.
Massachusetts rests in the heart of New England. The Bay State also has a relatively high amount of credit card debt per consumer. The average credit card debt in Massachusetts is $5,927 per cardholder as of July.
Illinois enjoys its reputation as the Land of Lincoln. This Midwestern state also has a relatively high amount of credit card debt per consumer. The average credit card debt in Illinois is $5,916 per cardholder as of July.
New Hampshire represents one of the smaller states but has a high amount of credit card debt per consumer. The average credit card balance in New Hampshire is $5,888 per cardholder as of July.
Utah has the Great Salt Lake and a smaller average credit card debt than most of the states it borders. The average credit card debt in Utah is $5,834 per consumer as of July.
Oregon carries a lower level of credit card debt per consumer than most of the states it borders. The average credit card debt in Oregon is $5,820 per cardholder as of July.
South Carolina is known for its coastline and beaches. The Palmetto State shares a border with Georgia but has a much smaller scale of credit card debt on average. The average credit card debt in South Carolina is $5,816 per consumer as of July.
North Carolina is known for its colleges, universities, and military bases, among other things. (The Tar Heel State has several state-based student loan forgiveness programs.) The average credit card debt in North Carolina is $5,757 per consumer as of July.
Rhode Island is the smallest state in the country in terms of its geographical area (1,214 square miles). The average credit card debt in Rhode Island is $5,747 per consumer as of July.
Oklahoma is located in the middle of the 48 contiguous states. The Sooner State is also at or near the middle of the pack regarding average credit card debt in America. The average credit card debt in Oklahoma is $5,737 per consumer as of July.
Louisiana sits along the Gulf Coast in the South. The Pelican State is also known as the Creole State and the Sugar State. The average credit card debt in Louisiana is $5,713 per consumer as of July.
Nicknamed the Keystone State, Pennsylvania has a lower amount of credit card debt per consumer compared with its Mid-Atlantic neighbors of New York and New Jersey. The average credit card debt in Pennsylvania is $5,612 per cardholder as of July.
Idaho is nicknamed the Gem State and is known for its potatoes. Average credit card debt per consumer in Idaho is one of the lowest in the Mountain West region. The average credit card balance in Idaho is $5,548 per cardholder as of July.
Well-known for its country music scene, Tennessee has a lower credit card debt per consumer than most of the 50 states. The average credit card balance in Tennessee is $5,516 per cardholder as of July.
Minnesota became the North Star State because of its geographical location in the country’s heartland. The average credit card debt in Minnesota is $5,481 per consumer as of July.
North Dakota has multiple nicknames, including the Flickertail State, Sioux State, and the Peace Garden State. The average credit card debt in North Dakota is $5,471 per consumer as of July.
New Mexico has a lower credit card debt per consumer than each of the neighboring states surrounding it. The average credit card debt in New Mexico is $5,466 per cardholder as of July.
Kansas markets itself as the Sunflower State. The average credit card balance in Kansas is $5,449 per consumer as of July.
Montana is known as America’s Treasure State and Big Sky Country. Montana also has the lowest average credit card debt in the Mountain West region. The average credit card balance in Montana hovers at $5,447 per cardholder as of July.
Missouri is not just any state — it’s the Show Me State. The average credit card debt in Missouri is $5,397 per consumer as of July.
Alabama enjoys a coastline along the Gulf Coast. Known as the Cotton State, Alabama is also known for peanuts. The average credit card debt in Alabama is $5,396 per consumer as of July.
Maine has relatively low credit card debt per consumer compared with other New England states. The Pine Tree State also has among the lowest credit card debt per consumer along the East Coast. The average credit card balance in Maine is $5,369 per cardholder as of July.
Michigan hosts several manufacturers of popular car makes and models. It’s also known as the Wolverine State and the Great Lake State. The average credit card debt in Michigan is $5,353 per consumer as of July.
South Dakota hosts the famous Mount Rushmore National Memorial. The average credit card debt in South Dakota is $5,277 per consumer as of July.
Ohio serves 11.8 million residents as of 2022, making Ohio one of the most populous states in the nation. The Buckeye State also has among the lowest credit card debt per consumer in the United States. The average credit card debt in Ohio is $5,267 per cardholder as of July.
Vermont is known as the Green Mountain State. The average credit card debt in Vermont is $5,259 per consumer as of July.
Arkansas — dubbed the Natural State because of its wildlife, bodies of water, and preserved open space — is a Southern state with a relatively low level of credit card debt per consumer. The average credit card debt in Arkansas is $5,210 per cardholder as of July.
Mississippi is one of the poorest states in the nation, but the cost of living in the Magnolia State is also among the lowest nationwide. The average credit card debt in Mississippi is $5,208 per consumer as of July.
Nebraska produces 81.6% of the nation’s great northern beans as of 2022, according to federal data. The average credit card debt balance in Nebraska is $5,180 per consumer as of July.
Indiana is America’s Hoosier State. The average credit card debt in Indiana is $5,125 per consumer as of July — one of the lowest in the nation.
Kentucky has a relatively low level of credit card debt per consumer. The average credit card debt in Kentucky is $5,088 per cardholder as of July.
West Virginia remains one of the few states that may pay you to move there if you work from home. The average credit card debt in West Virginia is $5,062 per consumer as of July.
Iowa ranks first in the nation in the production of corn for grain. The average credit card debt in Iowa is $4,958 per consumer as of July.
Wisconsin remains the largest cheese producer in the nation, and consumers in America’s Dairyland have the lowest average credit card balances nationwide. The average credit card debt in Wisconsin is $4,843 per cardholder as of July.
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You can find out your credit card balance by reading your credit card statement. Your credit card balance matters because it’s your unpaid credit card debt that you are expected to repay as fast or as slow as you wish.
The slowest way to pay down credit card debt is to make minimum payments each billing cycle. The fastest way to pay down credit card debt is to pay the full statement balance each billing cycle.
Cardholders with a credit card grace period may avoid interest charges on new purchases by paying the statement balance in full each billing cycle.The annual percentage rate (APR) on a credit card can be quite high compared with other consumer lending products. If you make minimum payments each billing cycle, it could take years to pay off the debt and the interest charges could be costly in particular.
How much credit card debt does the average American have? The average American credit card balance is $5,844 per consumer as of May 2023, according to TransUnion data.
Barbara Lorena Vergara/istockphoto
In general, leaving a small balance on your credit card is not the best idea if your goal is to build credit without incurring interest charges.Carrying a small balance may not be right for you if you can afford to pay off your statement balance each billing cycle. Unless you have a 0% introductory APR, you may face interest charges if you pay less than the statement balance.
How To Avoid Credit Card Interest
If your credit card has a grace period, you may avoid credit card interest charges by paying your statement balance in full each billing cycle. You may also want to avoid credit card cash advance transactions if you’re trying to avoid credit card interest charges. (Learn more at Should You Cancel Unused Credit Cards?).
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Consumers in all risk tiers use credit cards to buy goods and services. Credit card debt exists across all risk scores, but cardholders with bad credit are more likely to experience serious delinquency.According to TransUnion’s credit card debt data by risk tier (July 2023):
- 18.55% of subprime cardholders fell 90+ days past due
- 1.21% of near prime cardholders fell 90+ days past due
- 0.19% of prime cardholders fell 90+ days past due
- 0.01% of prime plus cardholders fell 90+ days past due
- 0% of super prime cardholders fell 90+ days past due
While it’s interesting to learn the average credit card debt in the U.S., it doesn’t help you much when you’re struggling to pay down your own credit card debt.
Most credit cards are unsecured without collateral. This means credit card account holders typically are not required to make a security deposit. Failing to pay and defaulting on your credit card bills can severely damage your credit.
When you make transactions on a credit card, the transaction activity represents an unpaid debt that you’ll eventually have to repay as fast or as slow as you wish. If you’re facing credit card debt challenges, below we highlight some ways you may manage your debt.
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Here are three tips that may help you reduce credit card debt:
1. Using Balance Transfer Credit Cards
Some credit card issuers offer new applicants 0% introductory APR financing on balance transfers. This enables you to transfer existing credit card debt to a new card and gives you a break from incurring interest charges. And when you transfer balances from multiple cards, you’re consolidating your debt as well, which can make it easier to stay on top of payments since you’ll have just one instead of multiple.
Promotional APR offers last a minimum of six months and can extend up to 21 months. Just note that you may incur a balance transfer fee, which is typically 3% to 5% of the amount transferred. With the way credit cards work usually, the balance transfer fee is added to the balance of the new account.
The key to utilizing a balance transfer credit card is to pay a portion of your remaining balance each month before you resume swiping at places accepting credit card payments. This ensures that you have the entire balance paid off by the time the promotional rate expires and the standard rate resumes.
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Another option to pay off credit card debt is to use a personal loan to consolidate debt. Personal loans are typically installment loans with fixed monthly payments and a fixed repayment schedule. Approval typically is based on your personal credit history and credit score.
If you have good or excellent credit (661+ VantageScore® 4.0), you might be able to qualify for a loan with a lower interest rate than your current credit cards have. When you receive funding from a personal loan, you can use it to pay off your credit card debt, which may have higher interest rates — especially if your APR is above the average credit card interest rate.
You could also look for a credit counseling service that can offer advice on how to manage your credit card debt and pay it off. There are nonprofit credit counselors who can help you to choose from one of many possible solutions, such as credit card debt forgiveness.
Credit counseling can also offer general financial education, such as explanations of important credit card definitions and tips on budgeting. Counseling can take place in person, online, or over the phone. You may be able to find nonprofit credit counseling services through a university, military base, credit union, or housing authority.
Beware that some vendors may not be legitimate credit counselors. The U.S. Department of Justice maintains a list of approved credit counseling agencies by state. Most of the reputable credit counseling agencies are nonprofit organizations that offer services at local offices, online, or on the phone, according to the Federal Trade Commission.
Whether you have a large or small amount of credit card debt, paying that balance off as soon as possible may reduce or eliminate your interest costs. When choosing a credit card, consider the card’s standard interest rate, as well as any promotional financing offered on new purchases, balance transfers, or both.
This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
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Communication of SoFi Wealth LLC an SEC Registered Investment Adviser. Information about SoFi Wealth’s advisory operations, services, and fees is set forth in SoFi Wealth’s current Form ADV Part 2 (Brochure), a copy of which is available upon request and at here. Liz Young is a Registered Representative of SoFi Securities and Investment Advisor Representative of SoFi Wealth. Her ADV 2B is available at here.
