How do I Ask for a Lower Interest Rate?

Getting a lower interest rate requires a sound payment history and persistence.

Getting a lower interest rate requires a sound payment history and persistence.

A high interest rate on a credit card or a car loan can add substantially to your monthly payment and reducing that interest rate can save you hundreds or even thousands of dollars over the life of the loan. Banks and finance companies are often reluctant to reduce interest rates because that is the chief way they make money. But with a good payment history, your bank or finance company may surprise you and lower your rate.

Steps to a Lower Interest Rate

Check your payment history on your loan. If you have made all payments on time and in full you are in good position to ask for a rate reduction. The bank or finance company does not want to lose a good customer like you.

Check your credit score and credit report. Your bank and finance company might lower the interest rate for a credit-worthy customer. The highest interest rates are typically charged on poor-credit customers. Financial institutions do this because default rates are highest on poor-credit customers and banks want to get as much money as they can from these customers quickly in the event that they do default.

Call the lender. It never hurts to ask for a lower rate and the worst that will happen is that the lender will say no. Your first call will be to customer service. Most likely, they will tell you there is nothing they can do to lower your rate. Next, ask for a manager who will most likely tell you the same thing, that there is nothing they can do.

Call the president of the lending institution. You can usually find out his name from SEC documents. Be firm in this phone call and complain about lousy customer service. Chances are you will soon be transferred to escalated customer service. Be nice in this phone call but insist the company look into your matter. They will. Once they review your payment history and how much business they will lose if you transfer your card to another issuer, your chances of a lower interest rate go up dramatically.

If your requests to your lender go unheeded, consider moving to another card with a lower rate. When you find a card with a lower rate, transfer your balance from the higher interest card to the new card. Pay off your balance on the high interest card and then cancel it.

Items you will need

  • Current interest rates on loans you have including credit cards, car loans and mortgages
  • Payment history for all loans you have

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About the Author

Lisa Nielsen is a marketing consultant for small businesses and start-ups. As part of her consultancy, she writes advertising copy, newsletters, speeches, website content and marketing collateral for small and medium-sized businesses. She has been writing for more than 20 years. She is also a business strategist, trainer and executive coach. Nielsen holds a Master of Business Administration from the University of Miami.

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