How to Lower Your Credit Card Interest Rate

The American Express interest rate is 17.99% (V) to 29.99% (V), depending on the card and on your overall creditworthiness. Some cards also offer a 0% introductory interest rate, lasting for a specified number of months. An American Express card with a 0% interest rate allows you to finance big-ticket purchases for several months without the costly interest charges.

The Amex cards that offer 0% intro APRs include: 

• Amex EveryDay: 0% for 15 months intro on purchases 
• Amex Blue Cash Everyday: 0% for 15 months intro on purchases
• Amex Cash Magnet Card: 0% for 15 months intro on purchases
• Amex EveryDay Preferred: 0% for 12 months intro on purchases
• Blue Cash Preferred: 0% for 12 months intro on purchases 

Business owners have two American Express introductory 0% interest rate credit cards at their disposal. Both American Express Blue Business Plus and Amex Blue Business Cash offer 0% for 12 months intro APR on purchases. 

American Express interest rates by card:

• Amex EveryDay: 17.99% - 28.99% (V) 
• Amex EveryDay Preferred: 17.99% - 27.99% (V)
• Amex Blue Cash Everyday: 18.99% - 29.99% (V)
• Amex Cash Magnet Card: 18.99% - 29.99% (V)
• Blue Cash Preferred: 18.99% - 29.99% (V)
• American Express Blue Business Plus: 18.24% - 26.24% (V)
• Amex Blue Business Cash: 18.24% - 26.24% (V)

You will need at least good credit to qualify for an American Express credit card with a 0% interest rate. American Express will also review your payment history, employment, income, your level of debt, and other factors. If you're applying for a business credit card, your personal credit history will play a significant role in the evaluation process.

The best way to get American Express to lower the interest rate on your credit card is to call their customer service line at (800) 528-4800 and get on the phone with a representative. You can do this by saying “representative” to the automated customer service menu. 

Simply asking can be more effective than you might think. For example, many credit card users who've threatened to cancel their cards if they didn't get better terms have been successful with that strategy at least once, according to reports online. People are about twice as likely to get a fee waived than a lower APR, though, so keep that in mind as you go forward.

Here's more info about requesting a lower APR for your American Express card:

• Before calling, make sure you know your current interest rate (APR is always listed on statements) and your account or card number. 
• You'll also have better negotiating power if you're aware of how long you've been an American Express cardholder and what your payment history is like.
• You can also contact customer service online, or through the Amex mobile app (for Android and iOS) to talk to a representative. 

If you don't get a lower interest rate over the phone, it's worth noting that your Amex card may offer Plan It. This feature helps you break up eligible purchases of $100 or more into installments over a set period of time, without your normal interest charges. Instead of charging interest on these purchases, Amex charges a monthly “plan fee”, which includes a percentage of the purchase amount and a percentage of the APR that would otherwise be charged. 

The plan durations and fees will depend on your creditworthiness, but you can sign in to the American Express app to see if your purchases are eligible for Plan It.

Credit card companies determine their APRs based on creditworthiness, or how much risk you pose as a borrower, as well as broader factors like the health of the economy. Creditworthiness is based on criteria such as an applicant's credit history, income and total debt owed. Other considerations include age, monthly housing payments and employment status. So if a credit card company advertises a card's APR as a range – 15% to 25%, for example – those are the main things that will determine the exact APR each approved applicant receives. There are also a number of factors that affect how issuers set their ranges, including the rates at which banks lend to their most creditworthy customers, the Federal Reserve's target rate and more.

How credit card companies determine their APRs:

• Creditworthiness is the main factor. Cards offered to people with good or excellent credit usually have lower APRs than cards available to people with less-established credit.
• Most credit card APRs are advertised as a range. When you get approved for a credit card, the issuer will determine what APR to assign based on your credit history, income, debt and more.
• Most credit card companies determine their APRs by adding a designated number of percentage points to the prime rate, as published by The Wall Street Journal.
• Credit card APRs are indirectly determined by the strength of the economy. During downturns, 0% credit card offers tend to disappear. And the average credit card APR is closely tied to the Federal Reserve's target rate.
• Credit card APRs usually are variable but can be fixed in some cases. A fixed APR does not fluctuate with changes to an index such as the prime rate. A variable APR changes as the prime rate or other index changes.
• If you don't carry a balance from month to month, you won't pay any interest. But if you don't pay in full by your due date (or by the due date following your 0% introductory period), you will owe interest on the remaining balance after that day. You will also owe interest right away on cash advances. On balance transfers, interest accrues right away or after any 0% introductory APR ends.
• Credit card interest compounds daily. Each day that you have a balance, more interest is added. And you pay interest on both the original balance and all previous interest.

You can see your interest rate on your credit card statement, listed under APR. But your statement will include several APRs other than the rate for standard purchases. Expect to see annualized rates for balance transfers and for cash advances. There may also be a penalty APR, a rate you're charged if don't make at least the minimum payment by the due date. Credit card issuers can change your APR for pretty much any reason once your account has been open for at least 12 months. But if they do, they're required to let you know 45 days in advance and the rate increase can only apply to purchases made 14 days after the notice was sent.

If you're wondering how much interest you'll pay each month, you'll need to know the Daily Periodic Rate (DPR). Divide the APR by 365, the number of days in a year. Multiply that figure by the number of days in the billing cycle. You can also use WalletHub's credit card interest calculator.

To find the interest rate on your credit card, look at your cardmember agreement and your monthly credit card statements. Your interest rate will be there in the form of an annual percentage rate (APR). But as “annual” implies, an APR is the cumulative interest rate for a whole year, which isn't all that helpful for calculating actual interest charges from day to day or month to month.

You can figure your daily interest rate – or daily periodic rate – by dividing your APR by 365 (days in a year) because credit card interest compounds daily. (It's worth noting that some card issuers may divide by 360 rather than 365). This calculation will give you the actual daily rate at which you accrue interest on a card. If your APR is 19.99%, your daily periodic rate would be 0.0547%.

The terms APR and interest rate are often used interchangeably. For general purposes, they express the same idea, though you'll get a much better sense of your actual “interest rate” by using the daily periodic rate.

It's worth noting that most credit card rates change (indicated in terms by a V next to your APR). So if the so-called prime rate that credit card APRs are tied to goes up, your rate will rise, too. A credit card agreement may note that the account's APR is the prime rate plus a certain fixed percentage. Or, your rate might rise to a penalty APR (also found in credit card terms) if you miss a payment. Your card issuer must notify you of a rate change 45 days before it takes effect, unless you're 60 days or more past-due on payment.

Though it's good practice to keep an eye on your APR, interest rates don't matter if you pay your credit card bill in full every month. If you aim to pay no interest, you won't have to worry about crunching these numbers.

You can figure out how much interest you will pay on your credit card by dividing the card's APR by 365 and multiplying first by your average daily balance and then by the number of days in the billing period. The interest charges you owe will also be listed on the credit card's monthly statement.

How to Calculate Credit Card Interest Charges

1. Find your credit card's APR

   Your credit card's APR will be listed in your cardmember agreement and on your monthly credit card statements.

2. Divide your APR by 365

   An APR reflects the annual cost of borrowing, but credit card charges are assessed daily. Dividing by the number of days in a year gives you the daily interest rate – or daily periodic rate – for your credit card.

3. Multiply the daily interest rate by your average daily balance

   Your average daily balance is the sum of your balances for each day in the billing period divided by the number of days in the billing period.

4. Multiply the resulting amount by the number of days in the billing period

   When this calculation is done, you will have the interest charges due for the billing period. Just bear in mind that some details do vary by credit card company.

Alternatively, the easiest way to determine how much interest you will pay on a credit card is to use WalletHub's credit card payoff calculator. It's a free tool that allows you to input the amount of debt you have (or will have) and your interest rate to get a payoff plan and a cost estimate.

You can set a payoff date, and we'll tell you what monthly payments you'll need to make. Or you can set a fixed monthly payment, and we'll tell you how long it will take to pay off. We'll also tell you the total amount of interest you can expect to pay and even which credit cards can save you the most money.

Whether you use WalletHub's calculator or calculate credit card interest charges by hand, you should first understand the basics of how credit card interest works. We'll highlight some key points below.

Key Things to Know About How Much Interest You'll Pay on Your Credit Card

• If you pay off your balance in full by your due date, you won't owe any interest.
• If you carry a balance from month to month, the interest you'll owe depends on your Annual Percentage Rate (APR). That shows how much interest you'd pay in a year. But since credit card interest gets charged daily, your card's interest rate is its APR divided by 365.
• Credit card interest compounds daily, which means the interest rate applies to your whole balance at the end of each day, including unpaid interest charges from previous days.
• The average APR among new credit card offers is 22.15%. But credit card APRs vary widely based on the applicant's credit standing.
• Nearly all credit card APRs are variable, as opposed to fixed, meaning they're based on a particular benchmark interest rate. This usually is the prime rate, which banks use when lending to each other.
• Many cards offer lower introductory APRs on purchases and balance transfers for a limited time, often starting at 0%. Once the introductory period ends, the APR will change to the normal rate.

To avoid interest on credit cards, pay the full statement balance by the due date every billing period. Most credit cards have a grace period between when your monthly statement is generated and when your payment is due, and interest won't accrue during this period if you always pay in full.

You can also maintain a $0 balance by not charging any purchases to your credit card account. There is no revolving balance for a credit card's interest rate to apply to in either case. Alternatively, you can avoid interest temporarily by getting a credit card with a 0% introductory APR and making minimum monthly payments.

Here's how credit card interest works:

It's impossible to owe interest without buying anything. And even a card with no balance reports positive information to the credit bureaus every month. Alternatively, making purchases and paying off the full balance listed on the monthly statement by the due date avoids interest thanks to the so-called grace period that most cards have. That basically means that people who consistently pay their bill in full get an opportunity to do so before interest applies to their purchases.

Interest is most often a concern when you need to buy something now but won't have all the money for a while. And in that case, the best way to avoid interest is to get a card with a 0% introductory APR. Keep reading below to learn more about that option and other ways to avoid credit card interest charges.

Here's how to avoid interest on credit cards:

1. Schedule monthly payments for your full statement balance. As long as you always pay the full balance listed on your monthly statement by the due date, the issuer won't charge interest. Set up automatic monthly payments from a bank account for the full balance so you don't need to remember. Just make sure your bank account balance exceeds the amount you charge.
2. Don't make purchases, balance transfers, or cash advances. Not using your card guarantees no interest, as long as you pay any annual or monthly fees it may charge. And the issuer will still report positive information to the credit bureaus each month.
3. Use a 0% credit card, and get out of debt before the regular APR kicks in. Lots of credit cards offer 0% intro rates on purchases, balance transfers, or both for a certain number of months after account opening. Your balance won't accrue interest during that period if you make the minimum payment each month. After the 0% rate expires, the regular interest rate kicks in.

It's not too hard to avoid interest on a credit card if you know what to do. If you're in the market for a new card and need to finance a big purchase, getting a 0% card is the best option. If you already have debt, you can move the balance to a 0% balance transfer card and pay it off before the intro period expires. WalletHub's credit card payoff calculator can help you.

Credit card companies will waive interest on a case-by-case basis, depending on both the credit card company's policies and the cardholder's relationship with the company. Cardholders with a long and positive account history have a better chance of getting interest charges waived, especially if the person doesn't have a history of carrying a balance or asking for fee waivers. But even the best account history doesn't guarantee that a card issuer will agree to take back an interest charge.

The best way to go about asking your credit card company to waive interest charges is to call customer service and explain the situation that caused the interest. Being late on a payment or only paying the minimum amount due will trigger an interest charge, for example. And if you usually pay on-time and in full, the card issuer is likely to grant an interest waiver, as long as their policy allows it.

Credit card companies are in heavy competition for your business, and many will do what it takes to keep you on as a customer - including occasionally waiving interest and fees. For example, over 40% of people who have asked their card issuer to waive a fee have been successful, according to a WalletHub credit card survey, but 1 out of 3 people have never attempted it.

It's also worth noting that some card issuers are temporarily more lenient about interest charges after major natural disasters or during global events, such as the COVID-19 pandemic. So if you'd rather not pay an interest charge on your credit card bill – especially if you're in a period of economic hardship that's out of your control – there's no harm in asking your card issuer to remove it.

Yes, asking for a lower interest rate on a credit card could affect your credit score if the card's issuer needs to do a hard inquiry into your credit history to determine whether or not you qualify for the lower rate.

A hard inquiry will typically drop your credit score by a few points, and it can only affect your score for up to 12 months. So, the potential negative impact is minimal. That said, receiving a lower interest rate may indirectly help raise your credit score if the new rate allows you to pay off your balance faster.

It's worth noting that interest rates aren't reported to credit bureaus and have no direct impact on your credit score. A hard inquiry is the only reason your credit score would drop after requesting a lower rate, and asking your card issuer for a lower rate won't always trigger a hard inquiry. A hard inquiry only happens if they need more detailed information about your credit history to address your request. Card issuers seem to make this decision on a case-by-case basis.

If you are thinking about calling your card issuer to ask for a lower interest rate, and you're concerned about the impact to your credit score, make sure to ask the rep about it along with your request.

Most credit card companies are likely to lower your credit card's interest rate if you ask, including Capital One, American Express, Chase, and Bank of America, according to reviews online. But if you're trying to get a better APR on your credit card, don't take this list to be exhaustive.

Theoretically, you can call any credit card company to ask for a lower interest rate. The worst that could happen is they'll say no. Every card issuer goes by its own rubric for rate decrease requests from cardholders. Your credit history is a factor in many cases, as is your history with the specific card's issuer. Some card issuers reportedly offer deals to people who pay in full every month. Others may periodically dole out low-APR promotions to existing accounts based on certain criteria, but they won't lower your APR unless you have one of these offers on your account.

What you should know before requesting a lower credit card interest rate:

• Know your current APR and how low you'd like it to go before you call customer service. 
• If you're currently experiencing financial hardship, consider explaining it to the representative. 
• Cite your good payment history (if applicable) and how long you've held that particular credit card, if you think it will help your case. 
• Consider whether or not you're willing to cancel your credit card and take your business elsewhere if they don't give you an offer. Sometimes, threatening to close your account will spin the results in your favor. The longer you've had the card, the better your odds.

Keep in mind that your credit score is one of the main factors that determines your APR on a credit card. Improving it will definitely get you closer to successfully negotiating a lower rate. If you want to know where you stand, you can check your credit score for free, right here on WalletHub.