Debt free is the way to be, but sometimes taking out a loan or charging something to a credit card is a necessity. When this happens, it’s important to pay it off as soon as possible. Unfortunately, high interest rates can make it nearly impossible to do so. When interest rates are high, making the minimum payment won’t work since most of your payment goes towards paying those interest rates. This could mean having debt for longer than you would like and paying more than you had initially intended. Thankfully, there is a way to help lower Interest Rates on Credit Cards and Loans so that you can pay off your debt more easily.
Increase Your Credit Score
Your credit score has a lot to do with your interest rates. If you have poor credit, then credit card companies and banks risk more by giving you the money you need. This means that they’re going to charge you more interest from the start so that they can recoup any costs they might lose by lending to you. If you want to negotiate lower interest rates, then you’ll want to increase your credit score. You can do this by making your payments on time. If you have any prior bad credit, you can work with a credit agency to help remove this from your score. By increasing your credit score, you’ve proven yourself to be less of a risk, which can equal lower interest rates.
If you have multiple loans through the same bank, you might want to talk to them about consolidating your loans into a single one. This will be especially helpful if you’ve been making your payments online since you’ve probably used these loans to increase your credit score. Most of your loans will have different interest rates, depending on your credit and income at the time. If you contact the bank to consolidate into one loan, you should be able to negotiate a lower interest rate, which will help you pay off your debt faster.
Bring Up the Competitors
If you have a credit card that has too high of an interest rate, you can use your credit card’s competitors as incentive to lower your interest rates. Call your credit card company and see if there’s anything they can do to lower your interest rate. If they tell you there is no reasonable way, then you can inform them what a specific competitor’s interest rate is at. Many times, credit card companies offer 0% interest for a specific time period, including on balance transfers, in order to entice new customers to sign up. You can use this information to negotiate a lower interest rate on your current credit card, or you can sign up with a new credit card and take advantage of their balance transfer special.
The interest rates on your loans and credit card debt shouldn’t make it nearly impossible to become debt free. What are your best tips for negotiating lower interest rates?
Elizabeth Lampman is a coffee-fuelled Mom of 2 girls and lives in Hamilton, Ontario. She enjoys travelling, developing easy recipes, crafting, taking on diy projects, travelling and saving money!