How to help lower your credit card interest rate

A credit card’s interest rate is the price you pay for borrowing money. The lower your interest rate, the less you might pay to borrow. If you’re looking for a lower interest rate on your credit card, you might have options. 

Find out how you may be able to get a lower credit card interest rate and possibly avoid interest charges altogether. 

What you’ll learn:

• There are a number of different ways you might be able to lower your credit card interest rate, including improving your credit scores and transferring your balance to a new issuer.

• The better your credit history and scores, the lower your credit card interest rate might be.

• You may be able to reduce or avoid credit card interest charges by paying off your entire balance by the due date each month.

A credit card’s interest rate is generally stated as a yearly rate called an annual percentage rate (APR). If you’re looking for a lower APR on your credit card, here are a few steps that may help:

Having a good credit score may help you receive better offers for new credit cards with lower interest rates, among other things. Here are a few steps you can take to monitor and improve your credit scores:

• Make on-time payments. Paying all your bills on time shows credit card issuers you’re a responsible borrower. Setting up automatic payments or electronic reminders may help.

• Stay below your credit limit. Using a lot of your available credit could be a red flag to issuers. The Consumer Financial Protection Bureau (CFPB) recommends keeping your credit utilization ratio at 30% or less.

• Only apply for credit you need. Credit applications may result in hard inquiries, which can temporarily hurt your credit scores. Applying for a bunch of cards over a short period may also give issuers the impression that you’re dealing with financial setbacks, according to the CFPB.

• Check your credit reports. Incorrect information on your credit reports could hurt your scores. But by regularly monitoring your credit, you can learn to spot errors. CreditWise from Capital One can help you keep an eye on your credit. It’s free to everyone, not just Capital One account holders. And using it won’t affect your credit scores.

If you’re thinking about getting a new card, consider all your options. You can compare rates and benefits for Capital One credit cards. 

You can also see if you’re pre-approved. Pre-approval is quick and easy, and it won’t affect your credit scores because it only requires a soft credit inquiry.

If you’ve worked on improving your credit since first opening your account, you could ask your credit card issuer for a lower interest rate. Depending on your credit score and overall financial profile, you might be eligible for a new rate. It may be worth asking, but keep in mind that credit card issuers might not approve requests for lower rates. And remember, you can typically avoid interest charges altogether by paying off your entire balance by the due date.

A balance transfer credit card lets you move debt from one credit card issuer to another. 

Some cards offer promotional interest rates that may apply to balance transfers, purchases or both. It’s not the same as lowering your interest rate permanently, but it can temporarily give you a lower rate. And you might be able to use that time to pay off your balance. 

When the promotional APR period ends, the credit card’s APR will typically increase to the standard APR, and you’ll have to pay interest on any remaining balance. So it’s a good idea to make sure the standard APR on a balance transfer is lower than your current credit card’s rate. It’s also worth checking for any balance transfer fees.

If you pay your balance off in full by the due date every month, you can avoid paying interest on new purchases. Even if you can’t pay off the entire balance, making more than the minimum payment may still help you reduce how much interest you pay.

One way to pay more than the minimum is to make multiple payments throughout your billing cycle instead of waiting until you receive the bill. But check with your bank first to be sure that’s allowed and that there are no fees or penalties for doing so.

When it comes to credit, there are no quick fixes. And the Federal Trade Commission (FTC) has warned of interest rate reduction scams that make those kinds of promises.

Here’s how these scams often work: A company calls saying it can negotiate with your issuer on your behalf, claiming they have a special relationship. It may offer money-back guarantees and say it’s a limited-time offer to get you to sign up.

But the company charges fees and requires you to supply personal information. Once it has your information, it can make purchases with your card or sell the information to others. The FTC says not to give out personal or financial information and to hang up if you get a call like this.

Here are some frequently asked questions about lowering your credit card interest rate.

A good credit history and credit scores may help you get a lower interest rate. And paying off your statement every month might help you avoid interest charges altogether. If you’ve been improving your credit, it may be time to look for a lower rate. You could consider a balance transfer credit card from Capital One. 

To get an idea of how long it might take you to pay off your current credit cards, try using the calculator below. Just input a few pieces of information, including your current APR. Then, explore options for paying off your cards. You can even enter different APRs to see how a lower rate might affect things.