The rates on credit cards are still very high for most banks and will probably always stay like that. With the way it is today, it can take years or even decades to pay off even a small balance by making the minimum payment, especially if you have thousands in debt. A better strategy might be to negotiate a lower interest rate, or a lower payoff amount, with your credit card company.
As the economy continues to stumble and borrowers fall further and further behind, credit card issuers are increasingly willing to negotiate with their customers to keep them from filing bankruptcy. Those credit card issuers know that if their best customers declare bankruptcy the bank could end up with nothing. For that reason, those credit card companies might be willing to lower the interest rate on your balance, or even reduce the amount you have to pay back. But even though credit card companies are increasingly willing to work with their customers, it pays to prepare before you call.
The first step is to make a list of what you owe, including the interest rate on each card and the total balance. Once you know where you stand, you will better able to focus your efforts where you will get the most for your money. For instance, you might want to start with the credit card that is carrying the highest interest rate. If you can negotiate a payoff on more favorable terms, you could greatly reduce the amount of money going to interest payments and reduce your debt substantially.
Negotiating a lower payoff amount on cards with a high balance can also give you more bang for your buck. When you call, it pays to know exactly what you want as well. Write down your ideal payoff, whether it is cutting the outstanding balance in half or reducing your interest rate substantially. While you may not get exactly what you want, setting an ambitious starting point will give you more room to negotiate with the credit card issuer.
Ask for a supervisor when you call. It is best to speak with a supervisor right away, because most of the time front line customer service persons do not have much authority in these matters. When the supervisor answers, be sure to explain your situation honestly. If you have lost your job or had your hours reduced, be sure to explain that and provide the reason for your request.
The more information you can provide the better off you will be. If you do strike a deal with the credit card issuer, be sure to get the deal in writing before you start making your payments Wait for the payment agreement to arrive, read it carefully, and contact the credit card issuer if there are any discrepancies. After you have reviewed the agreement carefully and started making your payments faithfully. Keep in mind that the credit card issuer might cancel the agreement if you fail to make your payments on time.
Negotiating lower interest rates might not be as easy as going to your bank and starting the talk, but nowadays, it’s definitely not that hard either – it’s worth a try even if you don’t have any financial problems!