The question about lowering credit card interest rates cannot be answered with a simple yes or no. While it is possible to lower your personal credit card APR through fiscally responsible behavior, it is not likely that as an industry, credit card companies are going to lower credit card interest rates universally.
Use the FREE credit card finder now to find a bunch of credit cards with low rates today!
In a recent story, CNN Money reports that banks are expected to hike fees and interest rates. This is in the wake of the CARD Act that stops banks from raising interest rates during the first year of the credit card’s usage. Banks are trying to recover their losses by imposing small increases in credit card interest rates. So it is necessary to examine various offers in the credit card market to get the best interest rates available.
Understanding the CARD Act
According to The New York Times, The CARD Act, or the Credit Card Accountability, Responsibility and Disclosure Act was instituted to protect consumers from unfair billing practices of credit card issuers.
Under the aegis of the Federal Reserve Bureau, it has some stringent rules in place that puts the well-being of consumers’ wallets before the profit making processes of credit card companies and banks. Some of the measures are:
- Credit card issuers are required to give consumers a notice of 45 days before making any significant changes to their account, including changes in interest rates, fees etc.
- During the first year of a credit card’s use, the credit card company cannot raise credit card interest rates unless it has a promotional teaser rate. In that case, the introductory rate has to be offered for a minimum of six months. However, if your payments are 60 days late, then the default APR rate, which is the highest rate in your agreement, will kick into place.
- The new interest rates cannot be applied retroactively to any old balance remaining on credit cards. The new rates are meant for new purchases only.
- Credit card bills must be mailed 21 days before the due date. The due date needs to remain the same, every month.
Unless you have an agreement in place with the credit card company, you cannot charge any new purchases to your credit card if your credit limit has been reached. In other words, you cannot be charged exorbitant over-the-limit charges.
Lowering Your Credit Card Interest Rates
While the Federal Reserve has placed restrictions to protect consumers from unfair practices, as vigilant consumers you can also take some actions that could help you reduce your credit card interest rates.
The first step is to raise your FICO scores. While this is not something that will happen quickly, taking steps such as paying your credit card bill on time and if possible, in full will help you raise your credit score, which in turn will help lower your credit card interest rates.
Another simple measure is to call your credit card issuer and talk to a supervisor, who has the power to make changes to your interest rate. If you are a customer in good standing with your company, they are likely to consider making some positive changes to your terms and conditions. If you have a poor FICO score, this might be near impossible, given the economic climate and stringent lending rules.
Before talking to your credit card company or bank, look at all the options available to you. It serves your purpose to be prepared with information and ammunition before you start negotiating for better terms!
In some cases, credit card issuers won’t budge, irrespective of your good standing with them. In that case, your only option might be to leave your credit card company or bank and find a new issuer. Always remember that this is much easier if you have good credit history, a stable job, and enough savings.
Other Options for Low Credit Card Interest Rates
If you have an excellent credit rating, then credit card companies are going to bend over backwards to get your business. An excellent option might be a new credit card with low introductory APR that would apply for a minimum of six months. This is especially useful if you plan to make a big purchase in the near future.
If your credit score is not so great, it might be tougher to get reasonable credit card offers.
With patience and some digging around, you are likely to find some credit cards that will offer you a lower APR than the one you are presently toiling under.
Always remember that if you are paying off your balance every month in a timely fashion, your credit card interest rate does not matter. If you operate on that mantra, you will soon be on the path to higher FICO scores and lower credit card interest rates.
With that intent in mind, use the FREE credit card finder to find the credit card that is right for you!
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