Helping A Friend Get Out of Debt – Part 3 – Cut Your Interest Rates In Half

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So far, in Part 1 and Part 2 of this series, I’ve discussed the following steps that my anonymous friend, Debtor Dan, and I have taken to put together a debt management plan in order for him to avoid the threat of bankruptcy.

  • Summarized the details of all of his different debt accounts in to one central spreadsheet
  • Determined the best debt prioritization method and finalized his Debt Free Action Plan.

Both of these are important first steps to assessing your debt situation prior to considering more active measures such as debt consolidation. However, there is one more step that is needed to maximize Debtor Dan’s chances of paying off his debt as quickly as possible – negotiating a lower interest rate!

How To Negotiate Yourself A Lower Interest Rate

As is the case with many aspects of personal finance, negotiating a lower interest rate is not rocket science and does not require a degree in finance and/or marketing; the only thing that is required is the desire and initiative to get started by simply calling up the companies that manage your debt accounts and asking for a lower rate!

However, taking this very important step can be quite scary, as I found out with my friend, Debtor Dan. Nevertheless, by putting together a precise script of what he needed to say during the call, the majority of the nervousness felt can be alleviated.

Note: I’m going to present this information in the context of getting your credit card interest rates lowered, since those are often the debt accounts involving the highest interest rates. However, if you have other types of debt accounts, the same preparation/model can be used. Just be sure to adapt it to your specific situation.

Preparing for the call

As I mentioned above, Debtor Dan could not simply go in to the call to request a lower interest rate “cold.” By taking some simple steps, Dan and I were able to greatly improve his chances of lowering his credit card interest rates.

In order to prepare for the call with the credit card companies, you will need to gather the following data:

  • Research what rates your credit card company is currently offering new customers for the same card you have.
    • For example, if you have a Chase Freedom Credit Card, you would visit their website and see that they are offering new account holders as low as a 12.99% APR interest rate. You would then make a note of how this compares to the current rate they are giving you.
  • Find out the national average credit card rate on
    • The current average variable interest rate on purchases is 14%. You would then make a note of how your current rate compares with this.
  • Visit and find another credit card that you are interested in. 
    • Once you isolate which you like, find out their terms (% interest and term) for doing a balance transfer from your current credit card to theirs.
  • Know how long you’ve been a customer with your current credit card and whether you have ever missed a payment or not.

    Do you have the information above compiled? Ok great! Now, it’s time to gather all of your records and make “the call of a lifetime!”

    Script for during the call

    As Kevin @ DebtEye mentioned in his guest post several days ago, the first step in making this call is to find the phone number of your credit card’s customer service department. This can be found either on your most recent credit card statement, or more easily, on the back of your credit card.

    Once you have located and dialed the phone number, I suggested the script below to Debtor Dan in order to ask for a lower interest rate:

    Debtor Dan: Good evening/morning/afternoon. My name is Debtor Dan. In the coming weeks and months, I’m going to be paying down my credit card balance more aggressively and want lower rate. Can do that for me?

    Credit Card Rep (Possibility A): Sure! Let me get that processed for you. (If this is the case, your job is done, and you just have to listen for the results!)

    Credit Card Rep (Possibility B – probably more likely, and the one you need to be ready for!): Uhhhhh….Why?

    Debtor Dan: I’ve committed to myself and my family that I’m going to pay off my debt more aggressively, and having a lower rate will help me do this. I’ve been a loyal customer of _____ credit card for ____ number of years and have never missed a payment. Other cards I have looked at, such as ______ card, are offering ____ % interest. Can you lower my interest rate by 40-50%?

    Credit Card Rep: That sounds reasonable. However, after reviewing your credit account here in my computer, it is not showing that your account is eligible for a reduced interest rate.

    Debtor Dan:  Thanks for taking the time to review this. However, that will not work for me. In addition to other cards offering significantly lower rates than you, I saw on your website that you are offering new customers an interest rate that is almost ____ % lower than what I’m paying. My interest rate is also ____ % higher than the national average of ____ %.  I have been a loyal customer for ____ years, and would prefer to not have to transfer my balance to a competitor. Can you match these rates or go lower?

    Credit Card Rep (Possibility 1):  I understand. It looks like the computer is now able to offer you a lower rate. Remain on the line for a little while I make the necessary changes. (If this is the case, your job is done! Pat your self on the back for a successful call!)

    Credit Card Rep (Possibility 2): I wish that I could help you, but I am not authorized to make this change.

    Debtor Dan: That’s understandable. No worries. If you are not authorized to make the change, can you give me your name and employee ID number and transfer me to your supervisor so that I can talk to him/her about this?

    After the customer service rep gives you his name, ID, and transfers you to his/her supervisor, you would then inform the supervisor that you were discussing the issue of getting a reduced rate with ____ (name), employee ID _______. This is important to instill accountability in the system.

    Next, you would basically repeat the same script used above with the supervisor. And, I will willing to bet that most, if not all of the time, this will work in getting your interest rate reduced. If it does not work, then the worst they can say is “no,” and you will be satisfied that you have done everything possible to get your interest rate reduced.

    I feel that I must also stress the importance of maintaining a professional demeanor during this call. You do not want to turn it in to a “yelling match.” You should not get upset, no matter what the customer service rep says. After all, it is not their fault. They are simply doing what they are told. Remember, it makes them more money to lock you in to a higher interest rate.

    If you do not succeed in getting your rate reduced, you would then want to explore other credit card options that offer lower interest rates, including the possibility of a balance transfer (provided that the fee to do so isn’t significantly high).

    How much can getting your interest rate lowered save you?

    Because credit card interest is “special” in that it accrues daily, getting your interest rate reduced can inflict serious savings in to your personal finances.

    For example, let’s say that before calling to lower your interest rates, your APR is 25%. And, by talking with the credit card rep, you get it lowered to 12%. This interest rate applies to your current outstanding balance of $5,000.

    Using the handy-dandy credit card calculator at, the following results are seen, assuming that your minimum required payment is 3% of your account balance.

    • With a 25% APR, it will take a total of 308 months to pay off your balance and will cost a total of $10,600 in interest. (Note from Jacob – Simply incredible! It’s amazing that this minimum payment game is legal!)
    • With a 12% APR, it will take a total of 155 months to pay off your balance and will cost a total of $2,300 in interest. Talk about a large amount of savings! That’s almost an 80% reduction in total interest expense.

    Clearly, the potential savings that can result from this one call is simply enormous. Well worth the 1 hour or so of total time commitment needed to make the call.

    Where do you go from here?

    After talking to your debtors and getting your interest rates changed, be sure to update your Debt Free Action Plan spreadsheet with the new minimum monthly payments (they should be MUCH lower now!) and due dates.
    For Debtor Dan, the results of completing this step were quite significant. He was able to lower his APR interest rate by 60% and reduce his monthly required debt payments by $178.

    Once the three steps discussed in this series have been completed, you must then take a step back and examine your debt payment plan as a whole. To do this, look at your total amount of monthly income compared to your monthly expenses. Identify how much you can afford to pay towards your debt balances each month.

    I think that most people will find that the combination of a lowered interest rate and cutting back on extraneous monthly spending will enable them to effectively pay off their debt. However, if after examining your financial inflows and outflows, you determine that there simply isn’t enough money available to meet your minimum commitments, you should consider additional options such as debt consolidation and counseling. Remember, you are never alone is improving your situation.    

    How about you all? Have you ever made a call such as this to get your interest rates reduced on your debt accounts? How did it go? 

    Share your experiences by commenting below!

      ***Photo courtesy of


      1. As you point out, it is a s simple as asking a question! It is the simplest form of negotiation. Basically you are presenting the company an opportunity to make an exception or a reduction. Too many people just accept things! I usually get what I want whenever I ask questions and be pleasant..
        My recent post The Problem with Health Care is You!

        • Thanks for sharing Krantcents! It truly is amazing what you can get by simply asking for it. What sorts of lower rates have you been able to negotiate in the past?
          My recent post Helping A Friend Get Out of Debt – Part 3 – Cut Your Interest Rates In Half

      2. Edwin@CashTheChecks says:

        Companies are always eager to negotiate with customers if they believe it will mean more money to them in the long run.
        My recent post Recent Posts From My Blog Network

      3. Nice, Commentary! I always asked questions to see where I could have reduced my interest rates when I was getting out of debt. The majority of the time I failed, but every once in a while I was lucky.

        • Thanks for joining the discussion Romeo! What types of debt accounts did you have success with in getting your interest rate reduced?
          My recent post Helping A Friend Get Out of Debt – Part 3 – Cut Your Interest Rates In Half

      4. optionsdude says:

        I have done this with credit cards in the past and was able to get a reduction about half the time. Usually the reduction was about 30% on an interest rate basis. It is well worth the time and is something I should review again to see where I might save some interest costs.
        My recent post Ignoring Market Noise When Trading

        • Thanks for sharing the details of your efforts Optionsdude! This also worked for me the one time I tried it recently as well!
          My recent post MicroMaximus – Reward Checking Account Transaction Tool – Review

      5. Payday Loans says:

        Negotiation is the best way to get lower rate of interest on credit cards. You can ask the credit card company to lower the interest rate on your cards and can tell them that you are getting comparatively lucrative offers from others. They will surely listen to you then.

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