This is something I’ve been doing for years, and thought everyone knew to do. Recently I was reminded that this isn’t common knowledge, so I thought I’d share this as a Frugal tip.
It’s a one-time thing that will simply take a little time on the phone.
Clean up your credit cards and lower your interest rates!
When I was in college, I was stupid and signed up for a student credit card. Boy, did I feel like a grown-up then! I could whip out the plastic and pay for things I really couldn’t afford, certain in the knowledge that someday, when I graduated and got a high-paying job, this would just be a month or two to pay off.
Yep. STUPID.
The very month I would have graduated college, I received a letter from my credit card company: my interest rate went from a reasonable 10.99% to 29.99% in an instant!
Are you kidding me?
I called them, of course, and asked why. To my recollection, I hadn’t been late on any payments, had always made a payment, and hadn’t done anything recently in other areas of my financial life that would have made them suddenly wary of me enough to penalize me that way.
Nope, they said. This was just the way this credit card worked. I hadn’t done anything wrong.
Basically, they suckered me in with a low interest rate and the promise of easy spending, then, when I was a college graduate with the potential to NOT get jobs because of bad credit ratings, they went for blood – I mean, money – and raised the interest rate to really take me to the cleaners.
Credit cards are not your friends, folks.
I fought for years with them over that interest rate, and finally a kind agent let me in on a little secret.
Play hardball.
Now that same credit card has a very nice 9.99% interest rate, and while I could fight to get it a little lower, 18 years of battling with them has worn me a bit out.
Still, that’s a very good reduction in rates, don’t you think?
So here’s what you do:
Get out your credit card. Call the number on the back. (It’s best to do this during normal working hours, as you’ll be more likely to get someone who does this full-time and can easily get a supervisor on the phone.)
Very politely tell the person that you would like your interest rate reduced.
They may respond favorably right away, or they may balk.
If they balk, nicely ask to speak to their supervisor.
Very politely tell the supervisor that you would like your interest rate reduced.
If they don’t respond favorably right away, inform them that you are holding in your hot little hands a credit card offer from [insert competing credit card company here] offering you a fixed rate 8.99% APR card with a [however much limit you would like to claim], and that you’d really like to keep your business with [current credit card] but that numbers don’t lie and you’re more than willing to – this is the key phrase here – CLOSE OUT THIS CARD and transfer the balance to the [competing credit card company].
I’ve never had this technique fail for me. Though I’m sure someone can claim this didn’t work for them, I still think the odds are in your favor for getting a rate reduction.
I don’t always get the rate I would like, but I’ve always gotten at least 5% taken off my card this way.
Another trick is to simply ask what they can offer you. I once explained to a credit card company representative that due to some unfortunate life circumstances, I was struggling at the moment and wondered if there was anything they could do to help me.
Of course I did have to explain what had happened to suddenly make my finances so horrible, but a car accident, a divorce, and being out of work due to injury for almost a year seemed to be an understandable explanation.
She said they were currently offering 0% APR deals to their customers for balance transfers, but that she was sure she could work something out. One quick call from her to her supervisor, and they offered me 0% APR for 6 months – on my existing balance!
That helped me quite a bit during that time.
Even better, I then employed the first trick (without playing hard ball) and simply asked if she could lower my interest rate for when the 6 months was over, and she dropped the interest rate from 19.99% to 11.99%.
No, credit cards are not your friends, but the people who work there are not evil people.
If you simply work up the nerve to ask for something from them, they’ll usually try to help you out.
So make a phone call, clean up your credit cards, and get those interest rates lowered!
Then pay them off as fast as you can and never use them again.
Remember the mantra: Use it up, Wear it out, Make it do, or Do Without.
