Published On: Sun, Feb 2nd, 2014

It’s Time To Lower Your Interest Rates!

Consumers with excellent credit might have more negotiating leverage than ever before, but that shouldn’t stop the rest of us from being bold enough to ask for lower payments. Knocking down the rate on a $25,000 student loan from 6.8% to 5.8% can save $1,518 over the life of the loan. Shave one-half of a percentage point off the rate on a $100,000, 30-year mortgage, from 8.5% to 8.0% and you save $12,654. Numbers like that make it worth a try; especially if you have a good payment history.

To be successful at negotiating lower rates, you have to follow a simple process; one that doesn’t begin with just picking up the phone and naively declaring that you want a better rate. Information and a solid strategy is key.

cut interest rateFirst things first: educate yourself on your circumstances. This might sound odd, but the average person knows the amount of a bill they pay monthly. They have no idea about specific terms, i.e. their interest rate, remaining balance, etc. The reality is that what worked for the woman in the cubicle next to you might not actually work for you. You can’t speak to your creditors intelligently unless you know for certain what terms you are actually dealing with.

Once you’ve reviewed your financial statements, research the average rates for the loans you want to modify. To get your creditor to match or beat the best deal around, you have to actually know what the best deal is. Visit  They list the prime rate, or the rate at which banks will lend money to their most-favored customers, daily. As the prime rate increases or decreases, expect any of your variable rate accounts to quickly follow.  They also list daily average rates on everything from mortgage and student loans to credit cards and auto insurance.

Compare these rates to what you currently have. If you have a 4.5% mortgage and the going rate is 5%, calling your mortgage lender might not be the most efficient use of your time. Knowing this up front not only allows you to be more strategic, but it gives you an opportunity to take the emotion out of the conversation you are preparing for. Your rate being lowered has very little to do with whether the representative “likes” you. This is a numbers game and you have to know the rules in order to play effectively.

Education begets empowerment, so only now should you embark upon the negotiation process. Due to the astronomical rates often associated with credit cards, they are typically the most logical place to start your quest for reducing payments. Begin your financial coup with the card that carries the highest interest rate first.

Give your credit card company a call and explain that you have reviewed your terms and would like to lower your rate. If they do not comply, in your nicest, stern, yet non-threatening voice, explain that you are considering closing your account and going with a different card that has a significantly lower interest rate. Make sure they understand your call was one of courtesy to allow them an opportunity to compete for your continued business. To increase your leverage, also mention that a more attractive credit card offer – at 7.9%, 8.9%, or whatever – “just” arrived in the mail. In essence, bluff and don’t be afraid to fake it ‘til you make it.

No matter whom the creditor is and what the debt is for, you have the right to at least request that your account be reviewed for savings benefits. Don’t limit your options by waiting until your debt is in default. Remove the fear, get informed and take matters into your hands. Your money and mind will both equally appreciate the relief.

Patrice Washington
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About the Author

- Patrice C. Washington has been making money fun since 2003 as a nationally recognized personal finance columnist, television commentator, radio host, speaker and leading authority on personal finance, entrepreneurship and success for women and youth. She's also the best-selling author of Real Money Answers for Every Woman: How to Win the Money Game With or Without a Man.

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Did you know?

African Americans are significantly more likely to have some type of debt (94%) compared with the general population (82%). Credit card debt, student loan debt, and personal loans are all significantly higher in the African American community.

Source: Prudential’s 2013 "African American Financial Experience" study