In debt? This trick could save you money on your credit-card bill - and takes less than 20 minutes

By Hannah Erin Lang

'Taking matters into your own hands is still the best move,' one analyst says of getting a lower APR on your credit card

Credit-card interest rates are about to drop from their highest levels on record - but there's one simple trick that could bring your rate even lower, experts say.

Some cards' annual percentage rates, or APRs, have already begun their descent. American Express (AXP) and U.S. Bank (USB) are among the major issuers that have already lowered rates on at least some cards, according to Matt Schulz, the chief credit analyst at LendingTree (TREE) and author of the recently published book "Ask Questions, Save Money, Make More."

Last week, the Federal Reserve announced a half-percentage-point decrease in the federal-funds rate, which helps set interest-rate levels across the economy. Just days later, Schulz - who monitors close to 200 credit-card rates on a monthly basis - noticed a corresponding drop in the interest-rate range on some cards.

For example, APRs on the AmEx Platinum credit card went from a range of between 21.24% and 29.24% to between 20.74% and 28.74%, according to Schulz's analysis. The APR range also dropped on cards like the U.S. Bank Altitude Go Visa Signature credit card, which now has a range of 17.74% to 28.74%.

From the archives (July 2024): Is this heavy-hitting American Express card worth the $695 fee? Yes, if you're in this group.

"That was pretty fast," Schulz said. "We didn't see any [large credit-card companies] get out in front of the [Fed's] rate decrease ... so it was good to see at least a couple major issuers take this step pretty quickly."

American Express and U.S. Bank did not provide a comment in time for publication.

The average interest rate on credit cards is about 22.8%, according to Fed data. That's the second-highest level since the central bank began collecting the data in 1994.

Falling interest rates could bring borrowers some much-needed relief. As rates climbed over the last couple of years, the size of Americans' collective credit-card debt burden grew, reaching a record $1.14 trillion.

But if you're behind on your credit-card bills, a quick call to your card company to negotiate your rate can make a much bigger difference than waiting for the Fed's next cut. Here's what you need to know to lower your bill.

When will credit-card rates fall? How will I know my APR is lower?

Your credit-card company is required to notify you 45 days in advance of any interest-rate increases or other fees being added to your account. But you might not get a notification if your rate falls, Schulz said.

It can take a month or two for credit-card APRs to fall after a Fed rate cut, he added.

"Every issuer kind of has their own timeline," Schulz said. "If places haven't done this six weeks from now, I'll be surprised by that. But these things take time."

To find out if or when your rate will go down, you can check your account online or call your issuer. While you're at it, you might want to go ahead and just ask for a lower rate.

How can I negotiate my credit-card interest rate?

Even though credit-card rates are likely to fall in the coming weeks, you're more likely to get a bigger cut by calling your credit-card company and haggling.

For the average credit-card holder, the Fed's half-percentage-point rate cut will likely amount to a difference of only a few dollars a month, as MarketWatch previously reported.

But in a June survey, LendingTree found that 76% of credit-card holders who asked for a lower rate got one. Those who were successful reduced their rate by an average of 6.5 percentage points.

'Asking for a cut doesn't cost you anything. If you're able to get a reduction or deflate your rate, that can save you a significant amount of money over time.'Mike Litt, consumer campaign director for U.S. PIRG

"That's a really big deal, and it's way more than you will ever get from the Fed," Schulz said. "Taking matters into your own hands is still the best move."

Mike Litt, a consumer campaign director for the consumer-advocacy group U.S. PIRG, called his credit-card company on Monday to test out the strategy for MarketWatch.

The company offered Litt an interest-rate reduction of several percentage points and even gave him the option of a temporary period of 0% interest, he said. The whole process took about 20 minutes, he added - and only because he asked so many questions.

"Asking for a cut doesn't cost you anything," he said. "If you're able to get a reduction or deflate your rate, that can save you a significant amount of money over time."

Before calling the number on the back of your credit card, it helps to do some research on what other rates are out there, both from your card issuer and from others.

So what should you say when a representative picks up the phone? Schulz offered a brief script to get you started: "Hi there. I've had this card for a few years. I haven't missed a payment, and I noticed that you're offering a rate of [number]% on your website, and mine is [higher number]%. Is there someone I could speak with about lowering that rate?"

Of course, the ideal situation is not paying any interest at all, Litt said. It's best to pay off your credit-card balance in full each month, if you can.

But if your debt is growing, "no communication is always about the worst thing you can do," said Alison Pahlkotter, a financial-wellness expert at GreenPath Financial Wellness, a credit-counseling nonprofit. Credit-card companies are often willing to work with borrowers who need a little bit of relief in order to keep paying down their balance.

When credit counselors set up repayment plans for households that are deep in debt, it's common for credit-card companies to set a "concession rate." That's typically a single-digit interest rate, though the offer can vary depending on the creditor. For GreenPath, the average concession rate last year was 7.3%. The Fed's interest rate does not affect these concession rates, Pahlkotter said.

Andrew Keshner contributed.

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-Hannah Erin Lang

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09-25-24 1105ET

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