Step By Step Guide To Credit Card Interest Rate Negotiations

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Hey everyone and, thanks for coming back for another Monday Money post! Last week we talked about ways to be modest about spending your money. I figured one of the best ways to follow up on that is to teach you ways to reduce what you spend on credit card debt. It’s no secret that the overwhelming fee associated with credit card debt is interest rates. It should also come as no surprise that quite a few people feel they pay an interest rate that they don’t think they should have to pay. And, most of them are right!

The bottom line is, a lender is in business to make money. Your business is important to them and, in many cases, if you tell them you have a problem with the services they provide, they will make an attempt to keep your business. However, keeping in mind that they are in the business to make money, they will very rarely reach out to you and say, “Hey John, you’ve earned a lower interest rate! Here ya go!”. The higher your rate, the more they make so, it’s up to you to recognize when a reduction is due and take action to get it! Here is a step by step guide to doing just that…

How To Negotiate Credit Card Interest Rates

Step #1: Get Your Ducks In A Row – Before you can start hiring contractors to build a home, you need the blueprints! Before you do anything in life, especially anything involving finances, it’s always important to do a little prep work to make sure that you’ve got everything you need. That being said, getting ready for the interest rate reduction calls is a pretty simple process.

All you need to do is make a spreadsheet that includes all of your debts and sort the data from highest interest rate to lowest. Also, do a little bit of research on balance transfer credit cards if you aren’t quite sure what they are and what is available to you. These cards are going to be your ammo against the lender when it comes to negotiations.

Step #2: Time To Start Making Calls – Before you actually start making the calls, you are going to need to know a couple of things. First off, the representative on the other end of the line has a lot more power over your interest rate than you think. So, being polite is of the utmost importance here. Also, this is a great option for consumers who haven’t missed payments within the past 12 months or spent more than their credit limit. If you have, I would strongly advise looking into credit card hardship programs or another form of more aggressive assistance. However, if you have been the model customer to the lender, here is how you should make the call…

Start by calling the lender that charges you the highest interest rate. When you call, you will most likely be greeted by an automated system. Choose the option to speak with a live representative. When the live representative asks you how they can help, say something along the lines of, “I was going through my credit card bills today and wow, my interest rate is pretty high here. I keep getting balance transfer offers in the mail but, I figured I’d give you a call to see if you could do anything to keep my business. After all, the transfer would be a hassle. (chuckle)”.

In this simple statement, you have told the lender that you are unhappy with your current credit card interest rate and, if they don’t fix it, they may just lose your business. The last crack at the balance transfer offer is to bring light into the conversation and show the representative that you’re not just another angry customer that is on the verge of yelling at them.

Step #3: Go With The Flow – When they respond, simply go with the flow of the conversation. If you are transferred to a client retention department, go over step #2 again. There generally is no negotiation in this process. I honestly don’t know why this process has taken on the name “negotiation”. The truth is, if you are polite, the representative will do everything he or she can to keep your business. At the end of the conversation, you will know if you qualify to receive a lower interest rate! Once you’ve finished with your first lender, continue calling each and every lender on your list. Keep in mind that you will be successful around 50% of the time.

What About The Debt With Lenders That Refuse To Reduce My Rates?

You have to expect that not all lenders are going to reduce your rates. The good news is, you’re not just bluffing with the balance transfer credit cards statement. The truth is, this might just be an option for you. That being said, I recently wrote a guide on understanding, applying for and using balance transfer credit cards. Feel free to go through the guide and decide if they are a good option for your debts that remain at high interest rates.

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