The latest Consumer Price Index (CPI) report, seasonally adjusted, showed overall prices for all items increased by 0.4%. While not the biggest increase ever, the CPI, which measures the average change in prices of consumer goods and services, is up 8.2% over the last 12 months.
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Meanwhile, interest rates continue to rise, with the prime rate reaching 3.25% in September. Credit card companies usually set rates based on the amount plus the prime rate. The amount depends on your credit score.
Even though interest rates are rising, it is possible to get your credit card company to lower your monthly interest rate. How? Check out these tactics that have worked for many consumers over the years.
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call and ask for a discount
Your credit card company may raise your interest rate if you miss a payment (this is called a penalty rate) or as a result of an increase in your prime rate. We may also increase your rate if you notice your credit score is declining. Experian says they need 45 days’ notice to raise rates for that reason.
However, except in certain circumstances, credit card companies rarely lower rates without prompting. (For example, if you’re paying a penalty rate, your credit card company must reduce that rate after 6 months of on-time payments.)
Therefore, action must be taken. If your credit score has improved since you received your card and you’ve made all your payments on time, ask for a lower interest rate.
Be prepared to push for rate cuts. Point out your credit score and on-time payment history. You may get lucky on your first attempt.
escalate the call
If the first person you speak to says no, contact your customer retention department. The people in this office want to keep their customers.
Unless they lower your interest rate, you may be able to negotiate with them by threatening to move your balance to a lower interest rate card.
Poll: How long do you think it will take you to pay off your credit card debt?
No results yet? Try again
In many cases, it is up to the person on the phone to decide whether or not to lower the interest rate. You may want to wait a few days and try calling again at a different time. You may obtain another person who determines that they can make changes for you.
If you are actively working to improve your credit, wait for your billing cycle and call again. Your credit score may have increased enough for your credit card company to justify lowering your interest rates.
Track threats
If your credit card company still can’t lower your interest rate, look for a better rate. First, take a look at the cards you already have and see if it’s worth doing a balance transfer. Don’t forget to do the math to determine if the direct debit fees are worth the interest savings.
Your best bet is to look at new cards with a 0% annual adoption rate. Then make a plan to pay off the balance in full before the introductory fee expires. Just don’t make the common mistake of charging an old card that you just paid for.
Consider debt consolidation
Even if interest rates rise, personal and home equity loans often offer lower interest rates than credit cards. You can also combine multiple credit card balances into one monthly payment. The downside is that instead of splitting the smaller payments into monthly installments, you’ll end up with one monthly payment. You need to carefully budget your cash flow so that you can make payments on time.
The bottom line: There are ways to lower credit card interest rates, even in times of inflation. With the holiday season approaching, it’s a good time to lower interest rates so you can pay off your balances sooner.
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