 Last November, just as I was getting ready for the run up to Christmas, Citibank decided it was a good time to cut my credit limit by 60%.This sickening event threw my Christmas budgeting into complete disarray and my head spinning into a swirl of emotions that included fear, hatred, and revenge. I felt so let down, even betrayed, by a company to whom I had always paid on time, but I decided to just bite the bullet and try to get through the season of goodwill and Christian charity as best as I could. Now they have once again changed my credit card's conditions and want to raise my interest rates. |
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It seems that this is no isolated case. According to Pamela Yip, business columnist for the Dallas News "issuers, trying to cut risk and to get more money from consumers, are cutting credit lines and raising interest rates." If you want confirmation of this, just Google "credit card cut my credit limit" and look at how many recently posted results you get. The fact is, however, that these companies are still desperate for your money, and as much as they may try to exploit the agreements to their advantage, there are still things that you can do to encourage them to be kind to you and your budgeting.
The following methods for how to negotiate credit card interest rates are largely open to people with a reasonable credit rating. Those who are less attractive to credit card companies should also try to use these methods, but if you are rebuffed persistently at all levels, find out what your credit rating is. You may need to focus on reducing your credit card debt first, thereby improving your credit rating. As this happens, your credibility and value as a customer will notably increase.
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Negotiating a Lower Credit Interest Rate: Preperation
The process will require an initial look at your payment history, a dose of obstinate perseverance and sweetly spoken, but unswerving demands. Your objective will be in conflict with the goals of your credit card issuer, so they will do their best to avoid giving you what you want. Being a good client will be your strongest asset, and to successfully negotiate your credit card interest rates, you should blow your own trumpet about it accordingly.
So firstly, consider your history. If you have met your payments on time you will stand a much better chance of success. Make some notes in bullet point form about how long you have been with your credit card company, how many times you have been late, and when it last happened. Having concrete figures will help you to cement your argument if you have to prove that you "are worth" offering better interest conditions to, even if you have been late paying or even missed the odd payment.
Second, you should consider what alternatives you have outside your present credit card company. Even if you don't want to change to another company, it will be easier to negotiate with some solid offers at hand, rather than trying to bluff your way through. Look at sites such like CreditCards, to find out what the average interest rates available to you might be, to see if rival credit card companies offer lower credit interest rates, and to look at whether your credit card issuer is offering any alternative cards or deals that you could use to your advantage.
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Talking to Your Credit Card Company
Once you have some alternative offers, you will be able to quote them when speaking to your credit card company. When you call, avoid the word "bankruptcy" at all costs because you want them to see you as a profitable and reliable long-term customer, not a possible risk. Tell the person that you speak to that you are happy with the company, but that you have to find ways to save some money and you want to know "how they can help you with this." This is the moment when preparation and perseverance will start to come into play.
Armed with your alternative offers, you may be lucky and get a positive response straight away, but if they refuse to change your interest rate, just ask to be put through to a supervisor. Supervisors often have more power to negotiate and can be more open to your proposals, particularly if they feel that you may take your business elsewhere. Be prepared to wait on the line for some time, supervisors are often busier than others because customers such as yourself know that they can get a better deal when dealing with them. Remember to quote rival offers if necessary, to demonstrate that you have other alternatives.
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Persevering
Reducing credit card interest rates can be difficult at times, and even at this stage you may get a refusal, but don't take it as a final response; just say goodbye, put the phone down and call back later. The reason for this is that when you call back, you will probably get a different person on the phone and they may be more open to negotiating with you. Do not desist until you have tried to do this several times, the more people you speak to the more chance that you will have of finding a sympathetic ear.
Not all companies will be willing to lower interest rates, store cards are a notable example. If your credit card won't budge it is time to look at what other offers you have found during your research, amongst which, there will be better interest rate options. Look at the possibilities carefully, consider how much it will cost you to transfer the debt, the length of time of the introductory interest rates, and the standard rates afterwards. If after doing your sums, you find that you can save money by moving your debt to a different company, it will be time to seriously consider transferring your balance to a new account.
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Closing the Deal
At this final stage you could find that, on discovering a client is truly intent on closing their account, the company will put you through to one of their "client keeping experts." |
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These people specialize in stopping you from leaving them, and in my experience can offer deals that no one else ever would. However, you still have to make sure that the deal on offer will actually benefit you in the long run. If it does, congratulations, you have succeeded in negotiating credit card interest rates.
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The Credit Card Shuffle
If you have several credit cards you can take a different approach, one that you should try before finding a new credit card issuer. Investigate what offers are available to you within your present companies. You may find that you can save a large amount of money by opting for a balance transfer to one of your cards at a cheap rate. This only requires you to call your credit card company and ask if you can transfer your debt to them at a cheaper rate of interest and if so, to move as much as you can into those cards. Before making the balance transfer into the cheaper account, try to create as much space in it as possible because the cheaper interest rate will be applied to the transferred debt. For a more detailed description of the process, you can view this video by MoneySavingExpert. |
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Summing Up the Basics
Whichever method you choose, remember the basics: preparation, perseverance, and a pleasant telephone manner. Don't threaten to leave your credit card company unless you are not given any other option, but make it obvious that you mean business. If you stay with them and get what you want, both sides will benefit, so just make your credit card company see that, and be civil but firm when you speak to them. |
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Grub Street Writing and Translation: Leaving out the parts that people skip |
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