The more money you pay in finance charges on your credit cards, the less you’re paying towards principal. And the less you’re paying towards principal, the longer it will take you to get out of debt. Fortunately, it’s not overly difficult to get your credit card interest rates reduced, and you don’t have to pay some bogus debt-reduction company to help you do it.
Who’s Eligible To Get Their Credit Card Interest Rate Reduced?
Consumers who have a lot of credit card debt and are beginning to have trouble keeping up with their payments are actually in the best position to get their rates lowered. It’s counter-intuitive, but at this point you represent a major risk to the credit card company. Most credit card companies would rather sacrifice a bit of their profit in order to prevent you from defaulting on your debt, since in that case they don’t get squat.
If your current interest rates are already pretty low by industry standards, you probably won’t have any luck getting them much lower. It’s not a charity, after all. Also, if your outstanding balance is relatively small or you don’t seem to be having any trouble making the minimum monthly payment, you won’t be seen as much of a financial risk and probably won’t be granted a lower rate.
Before You Call…
Gather your most recent credit card statements, paying close attention to what you’re currently paying in the way of interest and finance fees and how much your minimum payments are. If you’ve missed any payments lately on any credit card or loan you’re taken out, make a note of it. If you’ve been approved for any 0% balance transfer offers, keep those around too. These may all come in handy when negotiating your rates with your current credit card company.
Make The Call
Dial the customer service number on the back of one of your credit card statements. When the customer service representative takes the call, ask them if they have the ability to change interest rates on the account – chances are the first person you talk to won’t have the authority to make this type of change. If they say they don’t have the authority, ask to speak to someone who does.
When you’ve gotten through the gatekeepers to the people who can actually make a decision, explain that you’re having a hard time keeping up with your payments and that you need to reduce the interest rate you’re paying to save yourself some money. Let them know you’d prefer to keep your balance on their card for convenience but that you have another offer (low interest or 0% balance transfer offer) available that you could use if they can’t reduce your interest to 5% or so. Make it clear the status quo isn’t an option: you can’t afford the interest payments and you’re in danger of declaring bankruptcy if you don’t get something worked out soon. Offer them three choices: lower your rate, transfer the balance to another card, or declare bankruptcy. Their choice. Most times, lowering your rate will be the most financially rewarding for the company.
Then, sit back and listen to their response. They’ll almost always offer a lower interest rate, but not necessary as low as you’ve asked for. Thank them for whatever rate reduction they offer you. If you’re happy with it, go ahead and accept it. If not, your best plan of attack is to focus on paying down the debt as quickly as possible to reduce the interest you pay over time. You can seek out balance transfer offers with lower interest rates or maybe get a personal loan to pay off the high interest credit card debt.
Then, start an emergency fund so you don’t find yourself in this situation again
It’s not often that the quarterly results from one bank can be used to gauge the health of the entire financial sector but last week when JP Morgan issued their earnings report, they provided several clues about the overall health in the banking industry. They reported earnings that exceeded analyst expectations which is usually enough to make analysts and investors happy. However, the stock prices for banks large and small were hit hard as a result of the mixed news in the earnings report.