Posted by Julian Ramirez :: July 13, 2007 @ 8:42 am

I was talking with a friend who used to work at a bank, and he gave me a great tip on how to reduce your credit card interest rate.

Simply call up the credit card company and ask for a promotional rate. You'll want to call the number on the back of the card and ask to speak to the retention department. Politely ask the person for a promotional rate and slip into the conversation that you might leave and take your business elsewhere. The representative can easily give you a promotional rate that lasts for one year and can be as low as 1.9%!

Of course having a good history with them will help you argue your case -- being an established customer and having a strong repayment history will work in your favor. Also be aware that you can lose this promotional rate if you are late with just one payment, so now would be an excellent time to setup that automatic bill-pay feature you've been putting off.

It costs credit card companies usually five times as much to attract new customers as it does to retain existing ones. This is why the retention department has a strong motivation to work with you and keep your business. It's also why they can be so difficult when you are legitimately looking to leave.

You should also become informed about what your other credit card options are before calling them to request the promotional rate. Mention the promotional rates their competition is offering. Depending on your current credit card's features, you may want to follow through with the threat and leave if they don't lower your rate. Bankrate has a great tool to help you compare different credit cards to find one that works best for you.