Tips to lower credit card interest rates

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Q. I haven’t really paid attention to my credit card interest rates because I never kept a balance – but now I do. I was shocked at how high the rates are. What’s the best way to get lower rates without cancelling all those cards, which I know can hurt my credit?

A. We’re glad you’re now paying attention to your interest rates.

You’re right to think twice before cancelling any of your credit cards.

When you get rid of cards, you lower your overall amount of available credit. That can make a difference in your credit score because you’re lowering your credit utilization ratio, which is a factor in your score.

The credit utilization ratio compares your available credit to how much of that credit you’re using. If you have $20,000 of available credit and balances of $5,000, that’s not too bad. But if you cancel cards and reduce your available credit to $10,000 — still keeping that $5,000 of balances — you’re score will suffer for it.

Also, if you cancel cards you’ve had for a long time, it will potentially impact your credit history, or the length of time lenders see you’ve had credit. When someone is considering lending you money, they want to see that you have a long history of making good on your payments. If you remove your older cards from the equation, you’re shortening your credit history, which is another factor in your credit score.

So to your question, the first way to get lower rates is to call your current cards and ask.

Make sure to speak to someone who has the authority to change the interest rate, said Altair Gobo, a certified financial planner with U.S. Financial Services in Fairfield.

“You can tell them you are considering a balance transfer but it would be convenient to keep your current balance on this card.” Gobo said. “Ask if they would reduce the interest rate.”

Ask for both the lower balance transfer offer and to lower the rate on your current balance.

If you have a good payment history, there’s a good chance the company will lower your rate — and offer you a balance transfer option — because the lender will want to keep your business.

Consider hiring some help if you need a hand, but you can do this on your own.

If that doesn’t work, you can start shopping for new cards. There are plenty of web sites out there that will allow you to search for cards based on features you want, such as balance transfer offers, rewards you can earn, and more.

The balance transfer option — whether with your old card or a new one — may allow you to get a new credit card with a zero percent interest rate for a period of time, if you qualify, Gobo said.

If you decide to cancel some existing cards, therefore probably lowering your credit score, try not to do it if you’re soon looking for other credit such as a mortgage or a car loan. The points you lose on your score for cancelling will eventually come back if you stick to a good payment plan.

Finally, take a close look at why you’re carrying the balance and make changes to stop yourself from building more debt.

“Create a budget that will allow you to pay off your credit debt and not carry any balance,” Gobo said. “Focus all your energy on getting rid of high interest rate debt as fast as you can.”

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This story was first posted in October 2015. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.