When it comes to your credit card debt, you have more power than youmayrealize.
You already know your card’s interest rate plays a major role in how quickly your debt adds up — and how soon you’ll be free of it. But did you know that the interest rate you have isn’t necessarily the rate that you’re stuck with?
You cannegotiateyour interest rate with your creditor.A poll conducted by CreditCards.comfound that only 25 percent of cardholders contact a credit card issuer to negotiate. But the astounding news is that nearly 70 percent of those who did landed a lower interest rate.
Best of all, joining that 70 percent is easier thank you think. Here’show to negotiate yourcredit cardinterest rateand pay down your debt faster.
STEP 1: CHECK YOUR NUMBERS
Do a little homework upfront. You want to know exactly where you stand with your credit cards so you can decide the best place to direct your efforts.
Write down some basic information for each of your credit cards:
- Your outstanding balance
- Your current interestrate
- Your monthly minimumpayment
- The percentage of each payment that’s going just to interest
- How long it’ll take you to pay off that debt
Tip:This handydebt payoff calculatorcan help youcalculate #4 and #5 for each of your cards.
Once you’ve createdyoursummary, choose a cardthatyou want tonegotiate. For you, that might be the card with the highest interest rate, the card with the largest balance or something else.
STEP 2: CREATE YOUR STRATEGY
To succeed in an interest rate negotiation, you’ll want to give your creditor a compelling reason to work with you.
The very best incentive for your card issuer is a competing offer. That could be a lower interest rate on an existing card or the promise of better card terms from a new card. If you have a solid offer in yourinboxor mail for a better interest rate, use it. Your card issuermost likely wantsto keep your business and might be willing, at a minimum, to matchanother company’s promised interest rate.
Even without a better deal, you can still secure alowerrate. Point to the reasons that make you a customer they want to keep — like years of card loyalty or on-time payments.
Keep in mind that thecard repis much more likely to help you out if you’re respectful and politeduring your conversation.
STEP 3: MAKE THE CALL
You’re ready to negotiate!For the bestpossibleresults, don’t send a letter or fill out an online form.Instead, take a deep breath, pick up the phone,and call your card’s customer service department. You’ll want to talk with an actual humanbeing.
FREE GUIDE: 5 Simple Steps to Get Out of Debt
Once you’re connected, confirm thatyou’respeakingwith someone who has the authority to change your interest rate.(Ask to be transferred to the right person if you’re not.) Then make your case clearly and succinctly.Keep in mind that thecard repis much more likely to help you out if you’re respectful and politeduring your conversation.
STEP 4: EXECUTE PLAN B (AND C AND D… )
Odds are, you’ll get a yeswhen you ask for a lower interest rate.But that doesn’t mean you should give up if you get a no.Ifyou’re turneddown,youstillhaveplenty ofoptionsfor getting that lower rate:
- Find out why.Respectfully ask why your request was denied.Maybe, forinstance, you haven’t been a customer long enough to warrant a review of your interest rate.The insight you gain might tell you what you can do to improve your chances next time.
- Move up the ladder.If the phone rep denies your request, ask politelyto speak with that representative’s superior. That person may give you a different answer.
- Call backlater.It’s possible thata differentrepresentative might be more willing to negotiate with you.If you strike out with your first call, try again laterandpitcha different personoverthe phone.
- Negotiate fees instead.Even if your card issuerwon’t budge on your interest rate, it’s likely that you can coax them intoeliminatingsome pricey card fees.Even if you scorejust a reduction in fees, that could add up to big savings for you.
- Negotiate the rate fora different card.If your card company isn’t interested in negotiating, go back to your credit card summary table. Pick another card whose rate you’d like to lower and give them a call. You may get some traction with that other company.
- Consider a balance transfer.If you can’t change your interest rate, you may be able to move your debt to a less costly card. Research the cost of shifting your balance to a lower-interest card in your wallet. Or explore the possibility of opening a card with a 0percentbalance transfer promotional offer.
- Improve your credit.The better your credit history, the more in-demand you’ll be as a customer.More card issuers will entice you with great terms on their cards, and your current cardmaybe more willing to negotiate.Soplay the long game, and take decisive steps toboost your credit score.
