Low Interest Rate on Credit Cards: 3 Ways to Reduce Your Card’s Rate
Published: October 15, 2018 | Updated: November 4, 2020 | Posted by: Venus Zoleta | Credit Card
You’ve been trying to get out of credit card debt, but somehow you can’t even manage to bring it down. The high interest rate on your card could be blamed for it. You don’t have to be stuck with that rate forever, though.
Consider these three options to get a low interest rate on credit cards.
Table of Contents
- 1. Negotiate a Lower Interest Rate on a Credit Card
- 2. Consider a Balance Transfer Credit Card
- 3. Apply for a Credit Card Amnesty Program
- Final Thoughts
1. Negotiate a Lower Interest Rate on a Credit Card
How can you lower the interest rate on your credit card without getting a new one? Simple—ask, and you shall receive.
Filipinos can negotiate a low interest rate on credit cards with banks—it’s actually easier than it seems.
Never start a negotiation without any preparation. Here are some tips to keep in mind before asking the bank to lower the interest rate on your existing credit card.
Check and Improve Your Credit Score
The credit score is a critical piece of information that banks use for deciding on credit card approvals. You can also leverage your credit score to negotiate a low interest rate. Before you start calling the bank, check your credit score first.
Financial experts recommend reviewing your credit report at least once a year. It won’t cost you a thing to request a copy from the Credit Information Corporation or an accredited credit bureau. However, getting your credit score from a credit bureau comes with a service fee.
Your credit report contains data that determine your creditworthiness. This means if you have a good credit record and a high credit score, the bank will likely approve your request for a lower interest rate.
What does being creditworthy exactly mean? It’s when your credit report shows the following:
- You always pay your credit card bills in full and on time.
- You’ve never maxed out your credit card limit.
- You’ve been using your credit card for a long time now.
If your credit score is low, work on improving it first so that the bank will see you as a creditworthy client and deserving for a credit card interest rate reduction.
Research Credit Card Offers from Other Banks
Know what your credit card provider’s competitors are offering. Not only can you use them for negotiation later, they also help you decide a reasonable interest rate to request.
Banks spend a great deal of money to acquire new credit card customers, so they’re open to doing anything that helps them keep their existing customers and prevent them from switching to competitors. That includes agreeing to a low interest rate on credit cards.
Visit each banks’ website or call them up one by one to learn about their credit card offerings, including interest rates. If you spot a card with the same features as your existing card but offers a better interest rate, take note of the issuing bank, the card’s name, and its terms. Such information will come useful when you request a lower interest rate on your card.
Or save yourself the hassle by using a credit card comparison tool like MoneyMax.ph that instantly generates results based on different card features such as low interest credit cards. Shopping around for better credit card deals is easier that way.
Contact the Bank to Ask for a Lower Interest Rate
Armed with enough knowledge about your credit standing and the bank’s competitors, you’re ready to contact your credit card provider to negotiate an interest rate reduction. Get the bank’s customer service hotline at the back of your credit card or on your billing statement.
Some pointers to remember when asking the bank for a lower credit card interest rate:
- Start with your oldest credit card. Loyalty is important for banks, so it pays to mention that you’ve been a loyal customer for a long time.
- Tell how responsible you are as a credit cardholder. If you always pay your credit card bills in full and on time and has never exceeded your credit limit, let the customer service rep know about it.
- Be respectful and rational. Politely ask to lower your credit card interest rate. Don’t speak as if the bank owes it to you. Remember: you’re asking the bank a favor.
- Mention that you’re considering to transfer your credit card balance to another provider that offers a better rate. No harm in doing it! The bank will likely agree to lower your interest rate because it doesn’t want to lose your business.
If the bank agrees to your request, ask for the details on your new credit card interest rate. When will it take effect? Is it your permanent rate or just a temporary offer? Make sure to ask these questions when you get approved for a lower interest rate.
Getting your request declined is also likely, but don’t be discouraged by it.
If you get a “no” for an answer, ask if you can talk to a manager. Also, don’t be afraid to ask for the reasons and how you can qualify for a low interest rate on credit cards in the future.
You can call back later in a few weeks, and do it about once a month. Keep trying until the bank agrees to a lower rate. Persistence often pays off!
2. Consider a Balance Transfer Credit Card
What if the negotiation fails? Go for Plan B: transfer your credit card balance to a new card with a lower interest rate.
Credit card providers in the Philippines have a balance transfer program that allows qualified cardholders to consolidate their existing balances from different cards into a new card. Interest rates on balance transfer credit cards are generally lower than typical cards, ranging from 0% to 2.15%.
Availing yourself of a balance transfer program makes it easier to pay off your credit card debt. Once you get approved for a balance transfer credit card, your new provider will pay your existing balance to the original lender. In turn, you pay the balance in three to 60 monthly installments.
How to Find the Right Balance Transfer Credit Card
Some tips to find the best deals on a balance transfer credit card:
- Compare credit card fees. Look specifically at the balance transfer fees, annual fees, and other fees. You can easily compare balance transfer credit cards here.
- Find a low introductory rate. Preferably, go for a balance transfer credit card with a 0% introductory rate to maximize your savings when paying off your credit card debt.
- Know how long the introductory rate lasts. Find out when the low introductory rate will expire and what will happen at the end of the term. You’ll want to pay off your credit card balance before the low interest rate expires. Otherwise, you’ll accumulate interest on the balance you transferred, which means you’ll be dealing with debt again.
3. Apply for a Credit Card Amnesty Program
If all else fails, consider settling your debt via your issuing bank’s credit card amnesty program (if any) or the Interbank Debt Relief Program (IDRP) of the Credit Card Association of the Philippines.
Credit card amnesty restructures debts to make it easy for Filipinos to pay off their overdue balances. IDRP, for instance, offers low interest rates of 0% to 1.5% and long repayment terms of one to 10 years.
Read this guide to learn more about how to apply for a credit card amnesty program in the Philippines and get a low interest rate on credit cards.
It’s better to act now and be proactive in paying off your credit card balance than doing nothing and letting the problem grow bigger. Getting a low interest rate on credit cards is the first crucial step to break free from debt.
(Photos from Freepik.com)
Venus is the Head of Content at Moneymax, with 15+ years of experience in digital marketing, corporate communications, PR, and journalism. She invests in stocks, mutual funds, VUL, and Pag-IBIG MP2. Outside of work, she’s crazy about cats and Korean dramas. Follow Venus on LinkedIn.