A few years ago, when I had over $15,000 of credit card debt, I was often negotiating with credit card companies to get better interest rates. I took a very active approach toward minimizing my interest expense on my debt, and learning to negotiate with credit card companies was a key component. I am a big fan of the debt snowball method for getting out of debt, and you can actually use this as another tool to speed up the debt reduction process.
The steps to bargaining with your credit card company.
These are the steps that I actually took when I was trying to negotiate with my credit card companies.
1. Gather credit card offers
I gathered up a bunch of offers from other credit card companies. I would often get 0% credit card offers in the mail, so I just saved them up for a couple of weeks until I had a few decent ones that I was slightly interested in. The reason I gathered these up was to have a baseline to negotiate from. These offers would more or less allow me to prove to my card company that I didn’t need them because I had other offers. I could have made these offers up, but I don’t believe that lying to get what you want is ever justified – even to credit card companies.
2. Organize and make a list
From this point, I would make a list of all of my credit cards, the balances on each, the current interest rate, and how long that rate would last (if it were a promotional rate).
3. Call the first card company and try to reach the supervisor
Then I would grab the phone number off the back of the first card and start calling. (This is very important) Once I reached a customer service rep, I would try to get their supervisor. You can try to negotiate a better rate with the front-line rep if you want, but in my experience, they rarely can negotiate rates with you. Most of the reps I dealt with flat out told me “no.” Either way, ask for their supervisor. Once you are talking to the supervisor, you are now talking to someone who has authority to negotiate rates (most times), and they often are much more rational and will talk to you like a human being.
4. Plead your case
Now that I had the supervisor on the line, I would argue my case in a typical Matlock fashion. 😉 I would let them know that while I have enjoyed their business, I had three 0% offers from other credit card companies. I told the supervisor that I would love to stay with them, but if they couldn’t provide me with a better rate, I would be forced to go with one of their competitors. Just like you would expect, this worked with varying degrees of success each time. Sometimes they would offer me 0% for a fixed time frame; sometimes, they would try to pacify me with a 1% rate reduction. But I will say that they ALWAYS offered me something. So even if I didn’t get what I wanted, it was always better than not calling at all.
5. Transfer your balance if you need to
I had patience and was not afraid to leave, so if I couldn’t get the offer I wanted from the supervisor, I would just kindly hang up and proceed to transfer that balance to one of the offers I rounded up in step 1.
6. Get the best offer by closing your account
Once I had my balance transferred, I would call back to that card company to close my account. Many credit card companies have “closing specialists” whose only job is to do any and everything to keep your business. You can ask these guys for a ride on a unicorn, and they will try to make it happen if it means you will keep your account open. I found that these guys often will be able to offer you a better deal than anyone else because they know you mean business. I rarely took advantage of their deals because I had already transferred my balance, but it is something to keep in mind.
So there you have it – my quick how-to guide to negotiating with credit card companies. I assure you that you will have varying degrees of success based on your credit history, payment history, and other factors, but it never hurts to try. Oh, and by the way, this is the same method I use when trying to negotiate late fees or any other charges from them.
Many credit card companies recently launched a database tracking which card companies negotiate and how much users can reduce their rates by. As more and more people add their information to the database, it will provide more accurate information about credit card rate reduction. If you are interested in helping build the database, follow these steps.
Reduce the interest rates on those credit cards.
In order to make headway in paying off your credit card debt, you need an aggressive course of action. This requires lowering your interest payments, paying off the smallest balances first, and paying more than the required monthly payments. In order to get the monkey off your back, you have to first be prepared to fight back. In this war for your wealth, pacifism leads to poverty.
- You can lower your credit card interest by following a simple method:
- Find out your current interest rates on your credit cards.
- Shop around and find what competing cards are charging for interest.
- Call your credit card companies and ask to speak to a supervisor or manager. Use competitor rates to negotiate your rate down. Keep escalating your request up to the next manager if you do not get the answer you are looking for from the first manager you talk to. Be persistent. Don’t back down.
- While you are at it, negotiate to have your late fees reversed. This is also negotiable. Be prepared to fight back.
- Set up your future payments to that company to be made automatically. Either use a bill-payment company or have your monthly payments scheduled to automatically hit before their respective due dates.
- Continue making the largest monthly payment you can make—above the minimum payment.
What have you learned about negotiating with credit card companies?