Understanding Credit Card Interest Rates | CCCS of Rochester
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The use of credit cards can be very expensive. One of the most significant costs is the interest charged on unpaid balances. Most credit card interest rates are variable, meaning that the lender can change the rates during the life of the loan. Rates are more likely to increase than decrease.

What to Expect 

Many people wonder how much interest they will be charged when applying for a credit card.  The answer depends on multiple factors: your credit score, your credit history, and the type of card you are applying for. Average interest rates tend to fluctuate between 13%-15% for major credit cards. Retail accounts usually carry a higher interest rate- starting around 21%.  The lowest interest rates tend to go the individuals with higher credit scores.  Most states regulate the maximum interest rate  which can be charged  to consumers, however, credit card companies are able to charge interest based on the state laws where they reside. 

Why would my interest rate change?

There are many reasons why a lender would decide to change your interest rate.  The biggest reason is making a late payment.  If you are late making a payment, even one day late, the lender will require a hefty late-payment fee and may increase the interest rate on your account. If you chronically pay late, the lender may cancel your account and demand payment in full. If you do not pay the balance, they will send your account to a collection agency which will severely damage your credit rating. According to the new CARD act, there are rules governing interest rate increase. 

Negotiating Interest Rates

Getting a lower interest rate on your credit card isn't an impossible task. It might not be as easy as it was several years ago, but with the right approach you'll have a much better chance of success. When negotiating interest rates on credit cards, the most important thing is to get someone on the phone that has the authority to change your interest rate. At many credit card companies the first customer service representative that you speak with doesn't have the authority to do so. Ask to speak to a supervisor or someone who has the ability to make changes to the terms of your account. A professional, bottom-line approach is always the most effective so do your best to keep your emotions under control throughout the conversation. If you're not sure what to say once you have the right person on the line don't fret, this worksheet gives you a quick "cheat-sheet" to reference when you're ready to make the call. If you are unable to reduce your interest rates on your own, set up an appointment with one of our certified counselors

Is my interest rate reported on my credit report?

Although it’s commonly believed your interest rate affects your credit rating, interest rates are not disclosed to the credit reporting agencies. By law, credit card companies must include your interest rate on your monthly statement.

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