Jane McNamara, GreenPath president and CEO, discusses how prime interest rates are set for credit cards and ways to get yours adjusted to a lower interest rate, in her latest “Let’s Talk Credit” column on CreditCards.com.

Dear Let’s Talk Credit:

I was reading an article on how to lower your credit card interest rate and the article mentioned to know your Prime Rate. How do I go about finding that out? Can you please tell me where to find the prime rate? I would really like to call my credit card company and lower my 22.99 percent interest rate. Any advice would be greatly appreciated. Thanks, Tonya

Dear Tonya:

You are referring to the U.S. Prime Interest Rate that is based on the Federal Funds Target Rate. Currently, the Federal Funds Target rate is at 0.25 percent and the U.S. Prime Rate is 3.25 percent. Banks and credit unions typically tie the interest rate on their lending products to the Prime Rate. Usually institutions will add to the prime rate, but some consumers with excellent credit may qualify for products below the Prime interest rate.

For example, some credit card issuers are offering 0 percent interest for a specified period of time on their cards. Or you may find some institutions that will offer a car loan below the Prime rate.

Check your credit card statement and it should state how your interest rate is calculated.

Many card issuers have gone to a variable interest rate, which is tied to the Prime rate. Today, consumers with a good credit history would likely qualify for a variable interest rate card with an annual percentage rate of 10.9 to 13.9 percent.

Because your interest rate is quite a bit higher than that, it is likely that you have made some late payments, or you had less than stellar credit when you applied for the card.

There are options to get the interest rate lowered on your credit card. Before you get started, I suggest you find out exactly what your credit looks like.

Go to www.annualcreditreport.com and order copies of your credit report. Then, purchase your credit score from www.myfico.com. Once you know your credit score, you can compare what interest rates are being offered for your score.

If you have been making on time and as agreed payments for at least three to six months on your account, contact the card issuer and request a lower interest rate. Be polite and courteous.

Also, if you have offers from other card issuers at a lower rate, be sure to mention that when you call. This gives you the leverage to say you may have to take your business elsewhere if your rate cannot be lowered. Don’t give up if your card issuer says no. Call back another day and you might get a customer service representative that will help.

If you are having trouble making your credit card payment, you could ask your lender for a hardship program. These programs will lower your interest rate for a short period of time, usually six months to a year.

Or you might consider contacting a non-profit credit counseling agency, such as GreenPath. Our certified credit counselors will review your finances with you and make recommendations on how best to solve your current problem.

Let’s keep talking!

Jane E. McNamara
GreenPath President and CEO