Blogging for Change

How to Get a Lower Interest Rate (and Why It Matters)

by Jesse Campbell on
6/9/2025
in Repaying Debt , Using Credit
Man at cafe holding credit card and looking at phone.

If you’re trying to pay off debt, securing a lower interest rate isn’t just helpful, it can be game-changing. Whether you're dealing with high-interest credit cards or a costly mortgage, lowering your interest rate can reduce the overall cost of your debt, lower your monthly payments, and help you become debt-free faster.

Let’s break down how debt interest works, the best strategies for lowering your rates, and how tools like a debt management plan (DMP) can make a big difference—especially when you're feeling stuck.

Why getting a lower interest rate on debt is a big deal

When you borrow money, you’re not just paying back what you spent, also known as the principal. You’re also paying interest, which is essentially a fee for borrowing that money. And that fee adds up.

Here’s where it gets tricky: interest usually compounds, meaning you’re not just paying interest on the original balance, you’re paying interest on the interest. So the higher your rate, the more expensive your debt becomes over time.

Lowering your interest rate means more of your payment goes toward the principal each month, not just interest. That’s how you build momentum and save money in the long run.

How to lower your credit card interest rate

Reducing the interest rate on a credit card isn’t always easy, but it is possible. Here are three of the most common methods for lowering interest rates on debt:

  1. Call your credit card issuer and ask. If you’ve had the card for a while, pay on time, and use it responsibly, you may have a shot at negotiating a better rate. It’s not guaranteed, but it’s a simple ask that can pay off.
  2. Transfer your balance to a new card. If you have good credit, you might qualify for a balance transfer card with a 0% introductory APR. This can give you 12–21 months of interest-free payments. But read the fine print—many of these cards charge a 3–5% transfer fee, and if you don’t pay off the balance in time, you could be hit with deferred interest.
  3. Use one option to negotiate the other. Let your current creditor know you’re considering a transfer. Sometimes, the threat of moving your balance is enough to get a better offer—especially if you’re a loyal customer.

How to lower your mortgage rate

When it comes to mortgages, the main way to reduce your interest rate is by refinancing. This means replacing your current loan with a new one—ideally at a lower interest rate.

Refinancing might make sense if:

  • You have excellent credit 
  • Current mortgage rates are lower than when you bought your home
  • You have at least 20% equity in your home
  • Your home’s value hasn’t dropped

But refinancing isn’t free. Closing costs can be steep, and not everyone qualifies. Make sure the math works in your favor and shop around for the best offers.

How to use a debt management plan (DMP) to secure lower interest rates

If you’re overwhelmed by high-interest debt, especially from credit cards, a debt management plan through a nonprofit like MMI may offer a much-needed reset.

With a DMP, MMI works directly with your creditors to reduce your interest rates on your credit card debts and consolidate your payments into one manageable monthly amount.

Here’s what that can look like in real life:

  • Average APR before starting a DMP: 28.04%
  • Average MMI DMP APR (2024): 6.64%

That’s a massive reduction—and it means your monthly payments are going further, faster.

Common missteps to avoid when lowering your interest rate

Remember, creditors need a reason to reduce your rate—whether it’s your payment history, credit score, or a strategic threat to take your business elsewhere.

Also, a lower interest rate doesn’t always mean a good deal. Be sure to consider the full context: Are there transfer fees? Higher rates after a promo period? Hidden penalties?

Understanding the full terms before making a move is just as important as getting the rate you want.

Need help getting started?

If you’re struggling with high interest charges, help is available to you. A debt advisor at MMI can walk you through your options and help you find the best path forward, whether that’s a DMP or another personalized strategy. Learn more about how MMI helps people like you quickly repay debt.

Tagged in Debt strategies, Negotiating bills and fees

Jesse Campbell photo.

Jesse Campbell is the Content Manager at MMI, with over ten years of experience creating valuable educational materials that help families through everyday and extraordinary financial challenges.

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