6 steps to reducing your credit card interest rates

(From Bob: I was excited when Jay sent me this article about reducing credit card interest rates, because there are way too many Christians who are giving all their money to credit card companies instead of into the Kingdom! I wrote a similar article a while back as well – how to negotiate with credit card companies.)

Credit Card Debt can Destroy Your Wealth Potential

Have you ever heard the saying “I’m so poor, I can’t even pay at­tention”? It is so true with credit cards. Most people do not pay atten­tion to the fine print. The biggest financial mistakes that I see on a day-to-day basis mainly deal with credit card issues. It is not so much the balance that is the problem, it is the interest. This is the biggest wealth-killer. If you have even a $10,000 balance at 19.99 percent, this is almost $2,000 a year in interest. That is $2,000 that could have been donated or invested. This adds up over time, especially when you are making only the minimum required payments.

You will make very little progress if you are just sending that min­imum payment each month. This is where the credit card companies make most of their profit. If you owe $10,000 and make the minimum payments, you will often pay two to three or more times the principal amount in interest. That’s right, over the life of that debt, you’ll pay $10,000 or $20,000 or more to service that debt. So a $10,000 purchase may in reality end up costing you $20,000 or $30,000. Credit card com­panies make money by killing you with late fees, high interest payments, and confusing small print. Don’t be a victim of their game; get out of debt. You can’t achieve true wealth carrying credit card debt.

Reduce the interest rates on those credit cards!

Get the Credit Card monkey off your back

In order to make headway in paying off your credit card debt, you need an aggressive course of action. This requires lowering your interest payments, paying off the smallest balances first, and paying more than the required monthly payments. In order to get the monkey off your back, you have to first be prepared to fight back. In this war for your wealth, pacifism leads to poverty.

You can lower your credit card interest by following a simple method:

Step 1: Find out your current interest rates on your credit cards.

Step 2: Shop around and find what competing cards are charging for interest.

Step 3: Call your credit card companies and ask to speak to a supervisor or manager. Use competitor rates to negotiate your rate down. Keep escalating your request up to the next manager if you do not get the answer you are looking for from the first manager you talk to. Be persistent. Don’t back down.

Step 4: While you are at it, negotiate to have your late fees reversed. This is also negotiable. Be prepared to fight back.

Step 5: Set up your future payments to that company to be made au­tomatically. Either use a bill-payment company or have your monthly payments scheduled to automatically hit before their respective due dates.

Step 6: Continue making the largest monthly payment you can make—above the minimum payment.

The value of reducing your interest rates

Jane came to see me a few years ago. She didn’t think she could ever get out of debt. She and I sat down and figured out that at her current pace, it would take her twenty-eight and a half years to pay off her debt. Her interest rates were between 19 percent and 27 percent. She followed the action plan listed above and negotiated her rates down to 7–12 per­cent. She paid off the smallest balances first and kept allocating money toward debt repayment.

Within three years, Jane had paid off all her balances. She saved more than twenty-five years of payments and nearly $100,000 in interest charges. She is now able to take the money she was paying the credit card companies and give more to her church and save more for her future. Jane got the credit card monkey off her back.
























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12 Comments
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  1. I have been fortunate to pay off my CC in full and have not had to worry about this issue. But any time you can lower your rates you should. Is this something you would recommend even to ask if you don’t have that issue right now?

  2. Of course the best way to avoid interest rate issues is to pay it off each month. Don’t buy more than you can afford.

  3. Kathleen

    I owe over 35,000 total on 4 credit cards. Most of the money came from helping children who had lost jobs due to the economy and needed to pay insurances, mortgages, medical bills. They are still all struggling to earn enough but are also learning to do without and face their creditors rather than ask for more help from me. About 10,000 was put on over 4 years by me for my own needs because I began earning less and less each year in my industry. And about 5,000 was put on for my wants.
    I am considering bankruptcy because I have been unable to find work since January. I must work nights in order to care for a grandchild one more year. Our entire area is suffering. Most jobs available require college degrees, very flexible scheduling, or being a strong, etc. male.
    I have nothing left to sell and only own a 7 year old car. And I live with children who struggle now when once they prospered.
    Believe it or not we are all very happy and making the most of opportunities to help each other.
    My interest rates are between 14.99 and 5.99 on what I owe for the most part with about half being at 9.99. So asking them to lower their rates seems like begging for trouble.
    I am almost 56. My job opportunities without retraining look less and less attainable.
    I would like to declare bankruptcy of some kind. Ask children to help me afford retraining while living with one of them (they will), and then, in the future, pay off my debt. Is this possible? Is there a form of bankruptcy that admits I am unable to pay but will try to in the future?
    Thank you.

  4. Ya i agree that you should buy what you can afford, according to me we keep the credit cards as an added facility, but sometimes it cost us too much for making payments of the credit card bills.

  5. You’ve got to watch impulsive buying and really start paying cash for things. If you use your credit card make it a habit to pay it off at the end of the month or don’t make your purchase.

  6. In Dec of 09 my husband made the stupid mistake of quitting his job to go for a different one which he ended up NOT getting after 2 days of orientation, soooo here I am now, working 3, yes 3, jobs because on top of my regular bills, I now have to pay all of his. He cant find work. We live in a rural town where manufacturing was the heartbeat of it for many years which is now all gone to Mexico and China. I didnt realize how much debt HE acquired while he was employed. I soon found out when I started having to foot the bills. He ran up a CC to 1000.00, then another for 1200.00 and another for 1400.00. Even with 3 jobs its all I can do to make ends meet now. He didnt qualify for unemployment because he quit his job like a fool. I have taken every single card he has including his checks and debit card. As I pay things off the cards will be destroyed. If I can make it tl tax time and get back enough I can hopefully pay off 3 things. Not to mention he had a personal loan I didnt know about, which I just paid off. I try to budget for everything. He has put us in a huge hole not only financially but maritally also. He’s become super annoying and unappreciative. He gripes about the food I buy and the fact I say NO to just about everything he wants to go “out” and do. If its not in the funds, its not gonna happen. Why doesnt he get that? I hope this nightmare ends soon. Today wouldnt be soon enough. Ive cut back on everything I can bill wise. I tried to refinance the house but that fell through because the appraisal came out too low. What next?

  7. The well written article helped me a lot! Saved your website, very interesting topics everywhere that I see here! I appreciate the information, thank you.

  8. R. Lineberry

    In 2008, I took out a 15K loan in order to pay off an IRS debt, my daughters high school graduation, and part of her college education and books. I haven’t made a dent in the balance since then. Their website says my loan amount is 25,500.00 at 17.99% for 86 months. I didn’t take out this much money. I am paying almost $400.00 a month. I cannot continue to keep paying this amount for the next 8 years. I should have never agreed to do this. The interest rate was a lot better than the IRS, but you know the IRS debt was coming down way faster than this was before I took it out. I have paid them almost $10K back. Is there any way you can negotiate a settlement with these people. The company is Citi Financial / One Main Financial now. I have got to get out from under this and soon.

  9. Some of these comments show, not everyone is in credit card or other debt due to foolish spending.
    Many small business owners and self employed, and folks who have lost jobs, have no other way to hold on to health insurance or homes.
    The economy has hit hard.
    In our case, we dont take vacations, buy clothing, do much of anything except try to keep our house and insurance paid.
    We have had to borrow to keep our business open, and since it is the only way we can obtain health insurance we need to do that.
    Where is the compassion in the Christian community from financial authors?
    We are not all in this position from foolish living.
    And in cases where one spouse is handling a whole load, or medical conditions or age prevent seeking much extra work, part time jobs are not always possible.
    Sasha and Kathleen, blessings on you.

  10. We have had to declare Chapter 13 Bankruptcy

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