KEY TAKEAWAYS
✔ You aren’t stuck with your current interest rate. If things have changed, maybe your rate can too.
✔ You have options when it comes to renegotiating the interest paid on credit. It’s important to know what you can do.
✔ There are pros and cons to moving from one form of credit to another. It’s important to seek advice from credit experts.
If it’s been a while since you took out a loan or accepted a credit card with a high-interest rate, it’s time to ask, “Can I lower my interest rate and start paying down debt faster?”
The good news is that there are things you can do today that may lower your interest rate, bring down your cost of borrowing, help you climb out of debt faster, and even improve your credit rating along the way.
Here’s how.
Step 1. Negotiate a Lower Interest Rate
Interest rates aren’t carved in stone. Most lenders want to help you get the best interest rate possible so you can make your payments and pay off your debt. So, if you have high-interest debt that you’ve been trying to pay off but you’re struggling to make payments, the first thing you should do is call your credit provider and share your situation. Let them know that you want to pay off the debt and ask if there’s any way they could lower your interest rate, at least for some period of time. If you’ve been making on-time payments, you may be able to graduate to a better interest rate simply by renegotiating the terms of your loan.
If you don’t ask, they can’t say “Yes”.
Step 2. Move Your Balance to a Lower-Interest-Rate Product
If you can’t get your interest rate lowered, don’t get discouraged or give up. Instead, consider moving your debt to a lower-interest-rate product. For example, if you have credit card debt at 19.99% interest, and you can’t get the interest rate lowered, you could consider transferring your debt to a secured or unsecured line of credit.
This approach can pay off in two ways:
- A line of credit will likely have a lower interest rate.
- Lines of credit offer flexibility when it comes to paying off debt as quickly as you want because you can pay down the balance at any time.
A line of credit can be a helpful tool for lowering interest. Before applying, be sure to understand how it works and whether it’s the right choice for you based on how you use credit and manage debt.
Step 3. Consider Balance Transfer Credit Cards
You’re bound to get credit card offers that invite you to take advantage of very low, introductory rates from time to time. If you feel confident that you can transfer some, or all, of your higher-interest debt to one of these cards and pay it off entirely before the teaser rate expires, this could be a good chance to wipe some debt from your books.
However, applying for an additional credit card and having access to more, high-interest credit down the road can defeat the purpose if your goal is to get out of debt, not further in.
If you’re struggling to make payments on your debt, speak with a lending specialist to understand all your options. They can help you make an informed, money-saving decision and put you on the path to a better financial future.
Disclaimer: This content is intended for informational purposes only and does not constitute financial advice on any subject matter.
