Want a lower credit card interest rate? Just ask

If you’re unhappy with your credit card’s annual percentage rate (APR), securing a lower one may be as simple as asking your credit card issuer. The issuer may decline your request, but it never hurts to ask. If you’ve established a history of on-time payments and other responsible behavior with the issuer, you may be able to leverage this history to your benefit.

A lower interest rate can ensure you pay less in interest over time, so it’s worth asking how to lower an interest rate on your credit card. You may also be able to qualify for a 0 percent APR on a credit card for a limited time, although you’ll typically need good credit or excellent credit to qualify for that type of offer.

If you’re contemplating whether or not your credit card has a reasonable APR, consider this: The average credit card interest rate is currently just below 21 percent. If you have a credit card with an APR much higher than the national average, negotiating with your issuer may help you bring your rate to this level or lower.

How to ask for a credit card interest rate cut

Asking your issuer for an interest rate cut can seem intimidating, but it doesn’t have to be. The key is to do your research beforehand so that you can come prepared with the information you need to negotiate, like the details of your current card and how it compares to similar cards on the market. Let’s take a closer look at the negotiation process.

Find competitive credit card offers

Credit card companies don’t want to lose your business, which is why they need to stay competitive with other issuers. Before you call your issuer, look for a credit card that’s similar to yours and compare the interest rates. If you find a similar card with a better APR, take note so that you can share that information when you call your issuer.

That said, make sure the offer is actually competitive. If you have a bad credit score, for example, it wouldn’t make sense to compare your credit card APR to the APR of a card that requires excellent credit.

Call your card issuer and ask

With this information in hand, try contacting your credit card issuer directly via the customer service number on the back of your card and asking for a lower interest rate.

Here’s a sample script of what you might say in this conversation:

For this conversation to go as smoothly as possible, it’s important to be prepared. Know your current credit card terms — including your APR, grace period, statement due date and current balance — and use this knowledge to your advantage as you reveal what you’ve found when researching competing lenders.

If you were able to find a better offer from another issuer, relay that information to the representative. You may find they’re more willing to negotiate if you make it clear you’re considering taking your business elsewhere.

And if you’ve kept up with payments and have a solid history of responsible credit use with your issuer, they may lower your interest rate just to keep your business. The worst they can say is “no.”

Still no luck? You can also try the HUCA method. HUCA stands for “hang up, call again” and, as the name suggests, involves hanging up and trying again if you don’t like the first response you receive. It’s possible a second (or third) customer service representative might be more accommodating to your request than the first.

Does a lower rate trigger a hard credit pull?

The hard truth is this: Maybe it will, and maybe it won’t.

Here’s what makes the difference — if the creditor treats the request as a mere request, the chances are that a soft inquiry, or even no inquiry at all, will be sufficient. However, if the lender considers your request as an account change (like asking for a credit limit increase or another one of the bank’s cards that comes with a lower interest rate), then a hard inquiry is likely.

It ultimately depends on the creditor, what its rules are and what kind of relationship you have with it. The best thing to do is ask your creditor if requesting a rate decrease will mean a hard pull.

A hard pull most often happens when you ask for more credit, and the assumption is that you are preparing to take on additional debt. In the case of asking for a decrease in your interest on your credit card, though, you are not asking for more credit.

We contacted Capital One, Discover and Citi to see how they handle such requests, and all the representatives relayed that they don’t pull a credit report if a customer asks for a rate reduction. However, the reality is that each creditor has its own rules that the customer may or may not be privy to.

One word of caution: If you have a short credit history, or what is known as a “thin file,” then an inquiry may be more serious. If you have a limited history or a low score, a few points can affect a lender’s decision more than it would for a person with a high score and lengthy history.

Consider a balance transfer card if you’re denied

If you aren’t able to get your interest rate changed, one way to pay less in interest for a limited period of time is to apply for a balance transfer credit card, most of which offer a 0 percent introductory APR on transferred balances for up to 21 months. Just keep in mind that these offers typically come with a balance transfer fee, so you won’t get access to that 0 percent APR for free. However, applying for a balance transfer credit card can be a great option to consolidate debt without further hurting your credit.

With a top balance transfer card like the Wells Fargo Reflect® Card, for example, you’ll get one of the longest offers for purchases and qualifying balance transfers currently available. The Wells Fargo Reflect offers a 0 percent intro APR for 21 months from account opening on purchases and qualifying balance transfers (17.74 percent, 24.24 percent or 29.49 percent variable APR thereafter).

Keep in mind that a standard 5 percent ($5 minimum) balance transfer fee applies, and balance transfers must be made within the first 120 days to score this introductory rate. To determine whether a balance transfer will actually save you money, consider using Bankrate’s balance transfer calculator.

Improving your credit score can help you secure a lower APR

Whether you’re trying to negotiate a lower APR on your current credit card or applying for a new card, one way to land better interest rates is to take steps toward improving your credit score. One of the easiest ways to boost your credit rating is to pay your credit card bill early or on time every month.

You should also refrain from opening too many new accounts — which leads to multiple hard inquiries on your credit report — and closing old accounts, which can increase your credit utilization and decrease the length of your credit history. Both moves can negatively impact your credit score, along with other factors.

If you have a lot of debt in relation to your credit limit, you can also improve your credit score by paying off your debt. Most experts recommend keeping your credit utilization ratio below 30 percent for the best results, which means maintaining $3,000 or less in revolving balances for every $10,000 in total credit you have.

The bottom line

So, will credit card companies lower your interest rate if you ask? It’s not guaranteed, but it can’t hurt. However, there is one tried-and-true method for avoiding credit card interest altogether: If you only make purchases you can afford to pay off — and you pay your credit card bill on time and in its entirety every month — you’ll never get charged a dime in interest payments.

If you do end up with debt, make sure you’re getting the lowest interest rates possible. Securing a lower interest rate may be as simple as asking your current credit card issuer to lower your APR. In other cases, it may make sense to improve your credit score or transfer your balance over to a new 0 percent APR credit card.