By John Campbell
Regardless of what you may think, you don’t have to be at the mercy of credit card companies.
You may be paying much more for your credit cards than is even necessary. Many consumers mistakenly believe that once they’ve applied for and started using a credit card that all the card’s related fees and interest rates are set in stone - a costly mistake. With credit cards, everything may be negotiable.
When you first start building your credit you won’t be in an ideal position to negotiate better rates. You may not even qualify for credit cards with decent interest rates or other fees. As long as you don’t max out any of your lines of credit and make your minimum required payments every month your credit score will slowly increase. Over the years, the closer your credit score gets to the golden number 750 or higher, the more bargaining power you’ll have with your creditors.
If you already have very good or excellent credit it’s time to dust off your old credit card agreements and find out exactly what interest rates and fees you’ve been paying on your cards. Ideally, you should already know what you’re paying. Otherwise you may have been getting gouged for years and don’t even know it!
The first thing you’ll want to find out is how good the interest rates are on your cards. Annual percentage rates (APRs) below 10 percent are considered excellent, between 10 - 15 percent are considered decent and any APRs higher than that are probably costing you an arm and a leg. You will also want to jot down any additional fees you may be paying such as annual enrollment fees or other fees that will make the card less desirable.
The next thing you’ll want to do is start making some phone calls. Get the phone numbers of the creditors you want to negotiate with off the back of their associated credit cards or off of your monthly account statements.
When you call your creditors it may take a while to reach a customer service representative. You may need to navigate an extensive automated system before being transferred to a living, breathing person. After jumping through whatever hoops it will take to speak to someone in person, calmly explain that you think your current credit card terms aren’t to your liking and ask them if they’ll lower your rates or even eliminate some fees. If you know your current credit score feel free to bring that up as a bargaining tool. The better your credit score is, the more willing your creditors should be to reduce your rates to a more acceptable level.
If the rep you speak with seems unwilling or unable to help you, ask to speak with a supervisor or someone who is authorized to make decisions regarding your account. If that fails and you seem to be getting a lot of resistance to your negotiating tactics, simply threaten to close your account. If your credit score is high enough and you have an excellent payment history, most creditors that are worth their weight in credit will virtually bend over backwards to get you a better deal.
If you want to be a bit sneaky and bypass negotiations altogether, you can try calling up some of your creditors and ask to close your account as soon as you reach someone. The best creditors won’t want to risk losing a valuable customer and may offer you reduced rates or excellent balance transfer deals to persuade you to keep the account open. If you like what you hear, agree to the new terms and keep the account open (which you were never intending to close in the first place).
If you still have an outstanding balance on a card that you do decide to close if negotiations fail, it’s generally a good idea to wait to close out the card until your entire balance is paid off. You may not want to actually go through with closing out a card that you’ve had for a long period of time if you don’t have many accounts. Closing accounts will lower your overall access to credit, which could also lower your credit score.
Just because you may threaten to close out a card doesn’t mean you have to go through with your threat. If you can’t negotiate better terms but need the card to keep your credit score high, simply pay off the card as soon as you can and stop using the card entirely. Use the cards that do offer good rates and terms that are more favorable with what you’re looking for.
Always remember, it’s up to you to ensure that you’re getting the best deals and your credit is no exception. The time and hassle it may take to call one of your credit card companies today could save you a lot of money on your credit tomorrow.
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John Campbell is the writer and editor of CashBuzz, A financial portal for the rest of us. Check out cashbuzz.com for the latest articles on money management and tips and tricks that can help improve your finances. This article may be reprinted on your Web site if the copyright, author information and active link are included.
