3 ways to cut the interest rate on your debt


How can you pay less for what you owe?

Interest is the biggest cost for anyone with debt. You might have been sucked in to a low introductory rate and now find yourself paying significantly more on a much larger balance. Or you might at some point in your life have had a bad credit score and needed bad credit loans or no credit check loans with high interest rates. Perhaps you’ve never really paid much attention to what your debt was costing you other than to wish it was less. Many of us don’t do anything about the interest rates we have because we think we’re stuck with them – in fact, that’s not the case. There are ways that you can cut the interest rate on your debt.

Switch to a lower rate or refinance

There is always a better deal out there when it comes to interest rates you just have to find it. So, if you’re really struggling with what you’re paying for the debt that you have then look around for an alternative. Price comparison websites will show you whether you could be getting a better deal elsewhere – 0% on credit card balance transfers, for example, or a lower rate if you refinance your loan with another lender. Consolidating debt is another way to pay less interest – this involves paying off multiple debts that have a high interest rate by using a single debt with a much lower interest rate, leaving you paying less overall.

Ask for a better interest rate

Particularly if you’ve been with a bank, lender or building society for some time, you’ve established the kind of customer loyalty that potentially gives you a bit of bargaining power. Even if you haven’t, it’s always worth asking the question. The key when negotiating your interest rate is to be persistent – the first person you speak to is always likely to say no so you’ll probably need to go beyond them to get a result. Ask for a reasonable cut in the rate that you’re paying and identify a good reason for this. It could be that you’ve been a customer for some time or that other lenders are offering something better to borrowers like you. The threat of losing your business is often enough to make a lender negotiate.

Be a better borrower

The interest rates that we’re entitled to are significantly determined by our financial history. So, if you have a court judgment against you then you are unlikely to get the same interest rate as someone who has never even made a late payment on a credit card. If you want to improve your interest rate options in the future it pays to be a better borrower now.

  • Always make payments on time under your current credit agreements
  • If you can, clear credit card balances every month
  • Check your credit report regularly and remedy any mistakes
  • Look out for fraud on your credit report that could be dragging your credit score down
  • Clear some of the existing balances that you have
  • Set a target to avoid exceeding 35% of your credit limit – this will improve your credit score and lender perception of your borrowing


Dorothy Latch

The author Dorothy Latch