Lower interest rates are what allows you to pay less in finance charges and, as a result, allows your credit card balances to drop more quickly. Just a few percentage points reduction in your interest rates can make a huge difference in your ability to pay off your credit cards.
When you ask your credit card issuers for an interest rate reduction, you have to show why you deserve a lower rate. If you are experiencing difficulty with paying more than your monthly minimums, then your creditors will not be willing to provide a lower interest rate. They may even raise your interest rate if they feel that you represent a higher risk of default. You can take action now to protect yourself.
How We Request a Lower Interest Rate
When we ask your creditors for lower interest rates, we present them with a structured repayment plan (known as a debt management plan) that discloses permissible reasons for lower interest rates according to their guidelines. Our proposal includes debt totals, the number of included accounts and a comprehensive household budget.
Your creditors will be able to see the need for benefits, and will generally grant you full benefits once they determine that you qualify. The primary purpose of our counseling session is to see what options are available for you, including repayment on your own through strategies that we can recommend. This list of options may vary depending on your financial situation.
If your accredited financial counselor determines that you likely qualify for benefits, then you may be able to find relief through lower interest rates. Lower interest rates are one of the main benefits of enrolling in a debt management plan.
One advantage of using a debt management plan is that once your creditors grant a lower interest rate, your rate is locked in for the duration of the program. In other words, even if the prime rate increases, your rate stays the same. Your rate will not go up as long as you continue making consistent payments through the program.
Lowering Finance Charges
Getting a lower interest rate allows you to sharply reduce the number of finance charges that you are incurring on each account. In addition, the portion of your minimum payment that goes to finance charges shrinks, so that you can focus more on paying toward the actual principal balance.
A debt management plan can allow you to pay less in interest and apply more toward the principal balance. Some creditors offer substantial interest rate reductions. This offers the possibility of paying off the balances far quicker while making lower minimum payments at the same time.