President Trump’s proposed one-year cap on credit card interest rates of 10 percent does not appear to be imminent. However, you may be able to take steps to lower your rate while paying off the card balance.
According to the Federal Reserve, the average credit card interest rate is about 22 percent. But people with tarnished credit or a history of late payments can pay much higher rates — about 30 percent. Card delinquencies began to “level off” last year, the Fed said. But balances rose to $1.23 trillion in the third quarter, up 5.75 percent from the same period in 2024.
More people are carrying balances on their cards, with the average amount being just over $6,500, credit bureau TransUnion reported in November.
“People are struggling,” said Kristen Holt, chief executive of GreenPath Financial Wellness, a national credit counseling firm in Farmington Hills, Michigan. Lately, she said, GreenPath has seen clients with budget deficits of about $500 a month.
According to a bank interest rate calculator, a borrower with the average balance and interest rate would have to pay about $608 per month to pay off the balance in a year. The interest paid for the year would be $800.
If your card balance has exploded, whether due to year-end holiday spending or unexpected higher spending, consider the following strategies.
Can I request a cheaper rate from my credit card company?
Yes. “People are hesitant, but in many cases it’s definitely worth considering,” said Bruce McClary, spokesman for the National Foundation for Credit Counseling, a nonprofit that certifies groups to provide budget counseling and debt management services.
Particularly if you’ve been making your payments on time and have good credit — a score of 740 or higher — but are simply dissatisfied with your interest rate, it’s worth asking your card issuer if they’ll permanently lower your interest rate, McClary said. If your score is below that level but tends to be higher, you may still have room to negotiate, he said, although “it’s a little difficult if you’re below average.” (The average credit score in 2025 was 715, according to the ratings firm FICO.)
Mr McClary warned that a reduction of one to three percentage points was probably the best scenario. Still, he said, “Every little bit helps.”
Prepare by confirming the interest rate on your card (check a recent statement) and pulling your credit report, he said, because your lender certainly will. (Get your report for free at www.annualcreditreport.com.) “It’s nice to see what they see,” he said.
When you’re ready, he said, call the customer service number on the back of your card — and be polite. If there are deficiencies in your record – such as a late payment – be prepared to explain why.
If your score has increased, Mr. McClary said, say this: “I checked my credit and noticed that my score has improved significantly since opening this account. I’m calling to see if this can get me a more competitive interest rate and possibly a review of my current account terms.”
If that doesn’t work, he said, continue the conversation. Ask if there are other options, such as: B. transferring the balance to a cheaper card that the company may offer internally. Card companies are spending a lot of money to attract new customers, he said, and don’t want to lose existing customers to competitors that offer balance transfers if customers have a history of paying on time.
Michael Desimone, chief lending officer at Citadel Credit Union near Philadelphia, said if a lower interest rate isn’t possible, ask for payments twice a month — tied to a biweekly paycheck, for example — instead of just once. This can help reduce interest costs. (You can even do this alone.)
Should I consider a balance transfer card?
If you qualify, transferring a balance to a new card with a temporary zero interest rate can help you pay off your debt at a lower cost. Banks are currently offering interest-free credit card promotions with a term of 12 to 21 months. Typically, you’ll need good credit to qualify, and you’ll want to be sure you can repay the balance within the promotional period. Otherwise, you will pay double-digit interest again after the introductory interest rate expires.
Citadel’s Mr. Desimone said it was also important to consider transfer fees, which often amount to 3 to 5 percent of the balance. If you owe $6,000, the fee can be up to $300.
What if I’m worried about defaulting on my card payments?
If you can’t make payments because of a job loss or medical issue, you can request a temporary “hardship” interest rate reduction or payment deferral, said McClary of the National Foundation for Credit Counseling. Terms can vary, he said, but typically the pause allows time to absorb a short-term financial setback.
What happens if I can’t make payments for a long period of time?
If you know you won’t be able to make your payments for an extended period of time, consider a nonprofit credit counseling program. These programs offer free budget review sessions with professional advisors. If necessary, an advisor can also negotiate a debt management plan with your lender – usually for a monthly fee to the credit counseling agency – to pay off the balance over time at a lower interest rate.
At GreenPath, interest rates on debt management plans, which typically last three years or longer, average 6.6 percent, Ms. Holt said.
To find a reputable program, visit the National Foundation for Credit Counseling website, search the Financial Counseling of America website, or the Department of Justice website.
Are interest rates lower on cards issued by credit unions?
They often are. According to the National Credit Union Administration, a rate of 12 percent was common at credit unions in September.
Federally chartered credit unions must adhere to interest rate caps on loans and credit cards. While the maximum rate is 15 percent, the credit union’s administration has approved a temporary increase to 18 percent, which expires at the end of March. A spokeswoman for the credit union board declined to comment on whether the higher rate would be extended.
Credit unions typically serve customers who meet certain criteria, such as living or working in a specific geographic area or having served in the military. You can search the administration’s online search tool to find a club near you and check its membership requirements.
How can I change the way I deal with credit card debt?
Many people find it difficult to deal with the debt they have accumulated, said Kevin Feig, a financial planner and therapist in Dover, Massachusetts.
“There is so much shame, sadness and regret associated with debt that it is hard to move past,” he said.
He encourages his clients to change their mindset. View paying off your card debt as a financial opportunity, he said. “It will take that burden off their shoulders.”
What is the best way to pay off card debt?
Mr. Feig said he prefers the debt “snowball” method because it offers a quicker psychological gratification. The borrower pays off the card with the lowest remaining balance first. They pay as much as possible on this card while making minimal payments on their other cards. When the first card is paid off, payments move to the next card and so on. (The so-called “Avalanche” method involves paying off the card with the highest interest rate first. This ultimately saves more on interest, but takes longer to pay off the debt.)
When customers pay off a card balance, he encourages them to celebrate. “Nothing extravagant,” he said. “Maybe go out to dinner.”
What steps can I take to pay off or avoid card debt?
It’s income tax season and many people are expecting refunds, said Adam Rust, director of financial services at the Consumer Federation of America, a nonprofit consumer advocacy group. According to the Internal Revenue Service, the average refund is about $3,000. Applying all or part of the refund to the card balance could put a dent in your debt, he said.
Jamie Bosse, a financial planner in Manhattan, Kansas, recommends using a “sinking” fund. Add up the expected occasional costs – Christmas presents, vacations, tickets to sporting events, and the like – and divide the total by 12 months. Pay this amount monthly so that when the time comes, you have roughly what you need and don’t have to put it on a credit card.