Four steps to a lower credit card APR

If your credit card’s APR is too high, it’s in your best interest to lower it, especially if you’re hanging on to debt. An APR is the annual percent rate attached to your credit card— your interest rate. 

In fact, your card probably has at least two APRs; one for purchases and the other for cash advances. The higher the APR is, the more a carried over balance will cost. Also, interest compounds, which means it’s assessed on balances already increased by fees. 

When the APR is high, the interest costs can be astronomical. For example, if you owed $10,000 on a credit card with a 29.9% APR and paid it off over three years, the total interest costs would be $5,263. However, if the APR were 15%, the interest would be $2,480 — a $2,783 savings!

Thankfully, you may be able to obtain a more reasonable APR, and with less effort than you may think. Here’s how, in four steps.

Step 1: Understand why your APR is high

Credit card issuers don’t set APRs randomly; there is always a reason. Here’s why the rate on your card might be on the high side:

  • You were new to credit when you applied
  • Your credit history was damaged when you applied
  • You paid your bill late, so now have a penalty rate 
  • The 0% or low APR was for an introductory period, and the real rate has kicked in

Once you identify the reason for the rate you have and think you deserve better, start to construct your pitch for a better one. 

Step 2: Know what is currently being offered 

Credit card interest rates can fluctuate weekly, so find out what is currently on the table. Check the APRs that are offered to people with high and low credit scores, as well as the national average. For example, the current APRs may be:

  • 14.74%  for people with good credit scores
  • 25.33%  for people with bad credit ratings
  • 17.80%  national average

Understanding what the going rates are before beginning the negotiation process is important. Even if you can make a compelling case for a lower rate, the credit card issuer is unlikely to drop the APR below the best rate that is being offered. 

Step 3: Check your credit scores 

Your credit score is a major determining factor in the APR that you can get.  The most commonly used credit scores are the FICO and VantageScore. Both company’s scores range from 300 to 850, with higher numbers being preferable since they indicate less credit risk. Get your credit scores to find out what your rating is: 

300 – 579 = poor credit

580 – 669 = fair credit

670 – 739 = good credit 

740 – 850 = excellent credit

If your credit score is at least in the 700s congratulations! You have leverage. Such a score shows that you are a responsible borrower and are a low credit risk customer — just the type of cardholder a credit card issuer would like to keep and make happy. 

Step 4: Begin negotiating 

Now you have all the information you need to create a good case. Compile your data and thoughts, then call your credit card issuer: 

  • Ask to speak with someone who can reduce your APR. That might be the representative who picks up, or it could be a supervisor. 
  • Tell that person what your current APR is.  
  • Politely explain why you think it should be lower. 
  • Ask what they will do for you. 

If that person can reduce the APR to one that you believe is fair, great; you’re done! However, if the representative is unable to make the change that will satisfy you, ask to speak with someone who can help you with your request, and then re-start your pitch. 

In the event you get nowhere, ask what you can do to have the rate lowered in the future. Maybe your current scores aren’t quite high enough yet. If a recent late payment is the problem, you may have to send your payments on time for a certain number of months. 

It’s also possible that your balance is too close to the limit and you will need to power it down. Whatever the case, get clarity on what you should do, then try again when you’re in a better position. 

In a nutshell

There are no guarantees that your credit card issuer will reduce your APR even if you’re a star credit user. Don’t bang your head against a wall. 

Pay off any balance you have on the card, then use it only for purchases that you will pay off before interest is assessed. By doing so it won’t matter what the APR is because you’ll never be hit with a financing fee. And if you do want to spread the cost of a purchase out over time, apply for a low APR credit card that you qualify for and use it instead. 

Erica Sandberg

San Francisco-based consumer finance journalist whose work appears in a wide variety of top-tier outlets.

Erica’s the resident money and credit authority for KRON-4 News and author of “Expecting Money: The Essential Financial Plan for New and Growing Families.” Erica is an amateur hockey player and ballet dancer and has the broken bones to prove it.