4 easy ways to lower your credit card interest rates this October

Borrowing costs became more affordable last month after the Federal Reserve cut its benchmark interest rate for the first time in four years. While the Fed's decisions don't directly drive consumer borrowing rates, the rate cut still had a positive impact on a range of loan types, from mortgages to home equity loans. For those carrying balances on their credit cards, though, the rate relief was not as significant. 

That's because, unlike traditional loans, credit card interest rates are less responsive to changes in the Fed's benchmark rate. And with the average credit card rate now hovering around 23%, this type of borrowing remains costly, especially when you factor in the compound nature of credit card interest.

Credit card interest is calculated daily and applied monthly, meaning that if you don't pay off your balance in full each month, interest accrues on both your balance and any unpaid interest from the previous month — which can quickly add up. If you can find ways to lower your credit card interest rate, though, you can significantly reduce the cost of borrowing. 

Need extra help with your credit card debt? Learn about your debt relief options here.

4 easy ways to lower your credit card interest rates this October

There are a few possible ways to get lower credit card interest rates this month, including:

Ask for a lower rate

One of the simplest ways to lower your credit card interest rate is to call your card issuer and ask for a reduction. Credit card companies want to keep customers, especially if you have a history of on-time payments and good credit, so they may be willing to lower your interest rate if you ask.

Before you call, be prepared. Look up your credit score, review your payment history and compare other card offers. If you've been a good customer for several years, you might have more leverage. It can also help to mention competing offers from other card issuers with lower rates, as this gives you bargaining power.

If your first attempt isn't successful, don't be discouraged. Some card issuers may be willing to lower your rate by a few percentage points or waive fees after further negotiation, so persistence can pay off.

Compare the top debt relief companies and find the right fit for you today.

Take advantage of balance transfer offers

A balance transfer card is an effective way to temporarily wipe out interest, giving you breathing room to pay down your debt faster. Many balance transfer cards offer 0% interest for an introductory period, which typically lasts from 12 to 18 months. This means that for the duration of the promotional period, you can focus on paying down your principal balance without worrying about interest charges.

Before opting for a balance transfer, though, be mindful of a few factors. One is that most cards charge a balance transfer fee, which is usually around 3% to 5% of the amount transferred. The other is that after the promotional period ends, the interest rate will revert to the card's standard APR, which could be higher than your current rate. So, make sure you have a plan to pay off as much of the balance as possible during the 0% period.

Utilize a debt management program

If you're struggling to manage multiple credit card debts, a debt management program could help reduce your interest rates and consolidate your payments into one manageable monthly amount. These types of programs are offered by credit counseling agencies, with the goal of negotiating lower interest rates and waived fees on your behalf.

When you enroll in this type of program, you typically make a single monthly payment to the credit counseling agency, which then disburses payments to your creditors. You usually won't be able to use your credit cards or open new lines of credit during the process, but by lowering your interest rates, a debt management program can make it easier to pay off your debt over time.

Consolidate your debt

Debt consolidation is another strategy you can use to help lower your interest rate and streamline your payments. By consolidating your high-rate credit card debt into a single loan with a lower interest rate, you can save money on interest over time.

There are a few options for debt consolidation loans, including personal loans or home equity loans, and both options generally have lower interest rates than credit cards. So, by using one of these loan options to consolidate your debt, you may be able to lower your interest rate and make it easier to manage your payments. That, in turn, can also reduce the risk of missed payments and late fees.

The bottom line

While credit card interest rates are at record highs, there are several steps you can take to reduce the cost of carrying a balance. Whether you choose to negotiate with your card issuer, transfer your balance to a 0% interest card, enroll in a debt management program or consolidate your debt, taking action now can help you save money on interest and pay down your debt more quickly. And with the average credit card rate at a record high right now, every bit of savings counts.