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How to Lower Your Credit Card Interest Rate

6 min read

Last Updated: January 14, 2026

Table of contents

Key Takeaways

Credit card interest is the cost you pay to your card issuer for borrowing money.
Your credit card issuer calculates your interest daily and then charges you the total at the end of the month if you don’t pay off your balance.
You can avoid interest if you pay off your entire statement balance on your credit card bill every month.

What is credit card interest?

Your credit card is technically a loan from the card issuer. Just like with other loans, they come with interest as time goes by without the balance being repaid in full.

Credit card interest rates can be confusing for cardholders, not to mention frustrating when interest charges are added to their balance. Learn about how interest works on your credit card, how to lower a credit card interest rate, and how to avoid having to pay interest to become a savvier consumer and make better financial decisions.

How does credit card interest work?

Why is having a low interest rate so important? Your credit card company may charge you interest on your credit card balance if you don’t pay off your card by the due date each month. The amount of money you owe can quickly go up if you have a higher interest rate because of how compounding interest works.

What is compounding interest on a credit card?

Compounding interest is when your credit card company charges interest on your balance each day, including any interest from the day before. The addition of the prior day’s interest to the daily balance calculation causes interest to compound daily.

Let’s break the process down. At the end of each day, your credit card company calculates your interest for that day and adds it to your balance the next day. While they are adding this up daily, you only get charged if you make a late payment or have an outstanding balance. This process continues—compounds—every day of your billing cycle. So, the interest from the day before becomes part of the balance for the interest calculated the next day, and so on. When the month ends, your credit card company will add up the daily interest charges on your purchases and then apply it to your credit card account as an interest charge. (Note: This only applies if you don’t pay your statement balance by the due date).

So, the lower your interest rate, the less you could potentially pay in interest. Not only that, but a lower interest rate may give you the ability to pay off your debts faster. Ideally, you should pay off your credit card balance by your payment due date, but even if you can’t, if you manage to pay more than the minimum payment, you could help pay off the amount that you owe sooner.

You can use the Discover credit card interest calculator to see how adjusting your monthly payment may impact the time it takes to pay off your balance.

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Tips to lower your credit card interest rate

Improve your credit score

A higher credit score may help open the door for a lower credit card interest rate.

That’s because when you apply for credit cards, your lender may check your credit report. Many credit card companies use your scores to predict your future financial behaviors. If you have a higher credit score, it may show lenders that you’re responsible and can reliably pay your bills on time and pay back what you owe.

A low credit score may show that there's a higher risk that a person will not repay back the loan. So, one way that you may be able to get a lower interest rate is if you improve your credit score.

Compare credit card interest rate offers

You should always compare credit card offers for the best credit card for your unique situation. Some cards may have higher credit card interest rates than others. If you have a good credit score, it may be worth it to explore the best low-interest credit cards.

Get a new lower APR credit card

You may find that other credit cards offer lower or even a 0% APR introductory offer, meaning you won’t pay any interest in certain transactions for a set period of time. A 0% intro annual percentage rate (APR) credit card offer may come in handy if you want to finance a large purchase or want to pay off credit card debt quicker. If you get a 0% intro APR card offer, be sure to review your card's terms to be aware of all the rules that apply to the offer.

Did you know?

New Discover^® Cardmembers can enjoy low intro APR offers. See if you’re pre-approved with no harm to your credit score.¹

See if You’re Pre-Approved

Make a balance transfer to a lower interest rate card

Another way you can potentially lower your credit card interest is through a balance transfer card offer. A balance transfer credit card offer allows you to move the balance of a credit card with a high interest rate to a new credit card with low or no interest introductory offer.

The immediate benefit is that you get a lower rate, which may allow you to pay off your credit card debt quicker. But you should also keep in mind that a balance transfer credit card offer usually comes with a balance transfer fee, which may vary between 3%-5%.

You should review your finances to see if a balance transfer card will help you manage your credit card debt. Additionally, you should also keep in mind that the 0% APR offer is only temporary. You’ll need to pay off the balance before the introductory offer expires, or your standard interest rate will kick in.

How to avoid paying interest on a credit card

No matter what your interest rate is, you may still be able to avoid paying interest on your credit card with good credit management. For example, credit card APRs won't affect you if you pay off your monthly balance in full, so make sure you’ve saved enough cash each month to cover expenses charged on your card.

You can also take advantage of your grace period: the time between the end of your billing cycle to your payment due date. During this time, you can avoid paying interest on new purchases if you pay your balance in full by the due date. Different credit card issuers have varying grace periods, but according to the Federal Trade Commission and the Credit CARD Act of 2009, your grace period must be at least 21 days. If you’re a Discover Cardmember, your grace period will be at least 25 days from the end of the billing period, or a minimum of 23 days for billing periods that start in February.

Can you lose your grace period?

When you pay off your total balance before the end of your grace period, you can avoid interest in some transactions. But, if you carry a balance, your credit card issuer may not apply your grace period, meaning you’ll still pay interest on the outstanding balance and on new purchases. You should check your credit card's terms and conditions to understand how your issuer treats the grace period.

The bottom line

You can’t avoid having a credit card interest rate. After all, it’s the cost you pay to your card issuer for borrowing money. But you can avoid paying interest if you pay off your entire statement balance every month. You can also work to move your credit score to the top range which could give you better card rates. Good credit and debt management is key to handling your interest rates.

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