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How I Reduced My Credit Card Interest Rates


One of the most asked questions I have received involved getting the interest rates lowered on credit cards. It is disheartening to hear stories of those with interest rates over 20%. That makes it so hard to pay them off!

I have read and heard over and over again to call them to simply ask for a lower rate. For me, up until recently, over and over they told me no. A study I read about (and I can’t remember where I read it at the moment) claimed that calling your cards and asking to reduce the rate helped a little over 50% of people who tried it. Before I started paying off my debt, I was clearly in the group it didn’t work for.

I really wasn’t a good customer in their mind. While I paid my card on time, I only paid the minimum payment. I also had a huge debt-to-income ratio and my cards were almost maxed out. That made me a high risk to them and a high risk means that a higher interest rate is needed. That hurt my chances of negotiating a lower rate and I believe that is why calling wasn’t working for me.

Since I couldn’t get a lower rate, the only thing left to do was to pay off as much as I could on my cards. I needed to lower my credit utilization (how much of my credit limit I was using) as well as make sure all payments are made on time. Both of those factors, when reduced, actually work to increase one’s credit score. If you don’t have much spare money with your income to send more money, perhaps selling things would be a way to make some money or even obtaining a temporary part-time job. Make a dent in your debt and be very agressive with doing it.

Once I had paid off some of the balance on my credit cards (that’s where all of my 2005 tax return went), I was able to finally call them and get a lower rate. My credit score was improving and our debt-to-income ratio was lowering.  They even told me on the phone that I was a “good customer” and qualified for a lower rate (by 3%)

The improvement in my credit score also made it possible for me to obtain a new credit card to use to transfer a higher rate balance onto. I only have the low rate for 12 months, but that is 12 months that I have to keep paying off debt and having more of my payment going towards the balance and not interest. (Just a word of caution: with balance transfers, make sure you pay every payment on time or you may be faced with an interest rate over 30%.)

Even with the balance transfers, I still ended up with a balance of $3,500 that I couldn’t transfer.  I had heard about people to people lending through Prosper.com and decided to try to borrow $3,500 through there to reduce my interest rate.  Thankfully, I was able to receive a loan and it reduced my interest rate by 4%.  A word of note here, not everyone is able to get a loan from Prosper at a great rate.  Even though regular people are lenders there, they still are looking for a return on their money.  They will determine the amount of risk with your loan and decide the interest rate that they feel is comfortable for the risk.

It’s not easy. We have been sacrificing some things for a while and pinching pennies wherever we can to find extra money to send to our credit cards. We also are working more for a while (I currently work a full-time and two part-time jobs and my husband works full-time).  But it is worth it to finally get our debt paid down and to get our rates lowered.

In the end, always rememer to do what is right for you and your situation because every situation is unique. What worked for me may not work for everyone and I am far from a financial advisor.  What I described above has worked for us.



  • Reply Andrew |

    This ia a great story for others to read. My wife and I are currently tracking our budget so as to maximize our savings and pay off a few last debts. You are the second person I heard who has used Prosper.com. It seems like it worked well for you. Do you recommend Prosper.com for others?

  • Reply Tricia |

    I would definitely suggest that people at least check it out if they cannot lower their interest rates otherwise. I enjoyed my experience with Prosper and I have received some great advice from Lenders and they are welcome at any time to speak up if they see me wandering from the path to become debt-free.

    I have actually went into a bank and asked for a loan just to pay off a credit card and they turned me away flat out. With Prosper, I feel that borrowers have a better opportunity of stating their case and it’s more personal.

  • Reply Michelle Brown |

    I just read about you in the newspaper. WOW! You really put yourself out there for everyone to see! I am really impressed that you would do that with no gain for yourself (except that it keeps you accountable). I want to congratulate you on a job well done! I’ve heard about the headaches people get from going off caffeine. I hope yours go away soon. Just another word of encouragement on quitting smoking–once you’ve gone a year without smoking, your health, life, car, and house insurance premiums will go down! Not to mention how much you’ll save on cigarettes and doctor bills for related illnesses! So once you quit, immediately put it in your blog so that you have some sort of “proof” in case an insurance agent needs that info.
    Michelle Brown

  • Reply John |

    I’m glad you got a better rate through Prosper.

    The next time you get an offer for 0% intro rate, go for it. See what they say. The worst they can say is no thanks. Then keep living dirt-cheap and working your heart you, and you will turn the tables on them. I did it. You can, too.

  • Reply DEBTective |

    Great story (and great job) paying off the plastic, babe. But I know an even better way to not pay interest on credit cards. Don’t use ’em. Keep deep-sixing your debt as fast as you can and start saving the dough. Here’s looking at you, kid.

  • Reply Jenn |

    I’m sure you already know this but I came upon your site and thought I’d mention it. Make sure you are paying off your higher interest cards/loans first. Take every penny you can and out to the highest rate. This is the debt that is costing you the most money. If you have to pay only $50 0ver the minimum on other cards, do it to pay off the higher interest card firt. The once that is gone, take all the money you were sending to the first card PLUS the money usually sent to the next card and pay it off. Keep doing this until you get to your low interest loans and then pay them off too.

    This saves you money on interest and allws more money to go towards the debt itself. Hope it helps.

  • Reply DP |

    For those who need a low rate card, but still have the credit score to get one – should consider the UFCU Great Rate Visa for Mastercard. It’s a fixed 6.90% for purchases and cash advances, but requires a +720 credit score.

  • Reply Kneerfugsgesy |

    I’ve got an Amazon gift certificate burning holes in my pocket,
    and I want to get the most bang for my buck.

    Enter the Secret Amazon Web Pages:

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    This is where you’re going to find the “latest sales, rebates, and limited-time offers” from
    Amazon, and you can score some pretty deep discounts if you’re a savvy shopper.

    Next, there’s the special Sale link. This is open every Friday, and ONLY on Fridays.

    You can find the same good discounts here as you would in hidden Deals, although some
    Fridays you can really get lucky and make off like an Amazon bandit – I’ve seen discounts
    there as low as 75% off sticker price.

  • Reply Karen |

    It sometimes seems to me while reading various life stories that when you get a credit card the only thing you have to do all the time is to strive for lowering interest rates and paying off your bills on time.

  • Reply Credit Card Debt |

    I’ve found that the best thing to do is work with the credit card companies to pay off the debt. I’ve requested a lot from them – reduced rate, forgiveness of fees etc. More often than not one will find that they are willing to work with you.

  • Reply Doris |

    I’m always looking for ways to pay off credit card debt.
    I view credit card debt as being evil. It sucks you in and swallows you up. Situations that are out of your control happens and because of an accident, illness, death, or other unfortunate circumstances, you find yourself not being able to pay your debts. After having A-1 credit for 20, 30 and 40 years and you always paid your bills on time, you’re at a point where your interest rate on your credit cards has risen from 2-4% up to 30%. How do you deal with such ludicracy?

  • Reply James Roberts |

    I know what you are talking about. During these tight times and the dollar at an all time low, food ,gas and gold are super high. How do they expect us to pay the high interest rates.Thats why when i need to use credit cards i only use my business cards. To protect my personal credit score.

  • Reply will |

    Your story is a good one and the fact that you have the persistence to stay the course will be th reason you succeed. Your story should certainly inspire others to take control of their financial lives.


  • Reply Phil |

    Great inspiration to help me stay the course. I still have a lot of debt, but you gave me some definite ideas for solutions. Kudos!

  • Reply Phil |

    Very informative and a great place for resources…I am very pleased and very impressed! I look forward to spending more time here.

  • Reply nathalie |

    Your story is really close to home. It is true that there are just some bank institutions that would really squeeze out all your finances just to be paid. Considerations are something alien to them.

  • Reply Rockon |

    I am very pleased and very impressed! I look forward to spending more time here.Very informative and a great place for resources…

  • Reply Robert Brown |

    Debt settlement is an agreement between a debtor and a creditor to fully satisfy a debt for a lesser payoff amount. A debt settlement is usually reached when a debtor is unable to fully meet his/her debt obligations due to financial hardships. Debt settlement is also called debt negotiation. Technically speaking, a debt settlement is the agreement while debt negotiation is the process through which both parties reach that agreement.

    Debt settlement programs are designed to assist consumers with a financial hardship to settle their debt through debt negotiation. Debt settlement specialists will negotiate a less than full balance settlement to resolve the debt. Credit cards, medical bills and other personal unsecured lines of credit may be eligible for a hardship settlement. To discuss debt settlement and find out what your options are to get out of debt contact a debt analyst today. You can call

    Contact – Robert
    “Your Friendly Debt Analyst”

  • Reply ester |

    Thanks for sharing your experiences and your views. I loved the way you have concluded the post, with a great line- ‘In the end, always remember to do what is right for you and your situation because every situation is unique.’ This is actually a sincere suggestion. We have to find out different solutions according to different situations.

  • Reply Kelly |

    Thank you for sharing! And I wasnt going to reply, until I read your last sentence! “In the end, always remember to do what is right for you and your situation because every situation is unique” I love that and love that you shared your success story! I help clients everyday get set up on a debt management program, and your motto is exactly what I feel when I am working with my clients! ClearPoint Credit Counseling(www.clearpointccs.org) offers debt management plans, with lower APR’s and payments, and your debts are paid off in 60 months or less! We also educate the client, so that they do not fall into the same cycle after the plan is finished! Debt settlement is NOT the way to go! Debt Doctors are not the way to go, and Bankruptcy should be everyone’s last resort! Thank you, Kelly

So, what do you think ?