Credit cards have always been fickle things – you use one for a bit, try to make your payments on time, and soon realize that between rising interest returns and annual fees you’re shelling out more than it looks like is worth it. The bank is the one with the money: you feel powerless. On one hand, it’s only natural to feel weak in the face of a far more powerful body (a bank), but on the other hand you have to remember that you are the consumer. It might not feel it, but you have power, you have rights – and sure enough, you can bring this straight to the bank and negotiate with creditors to try and make your life a little easier.
Remember that banks are not unfeeling machines; when you reach out to make contact you’re often speaking to people who can sympathize with you and have probably, at some point or another in life, felt what you’re going through. You can negotiate with creditors by talking to people and keeping yourself well informed on what a bank will and will not change to keep you as a customer.
So just what can you bring up to try and cut back on costs? Well…
Change Your Payment Date
Your paycheck is late, you’ve had an emergency and aren’t sure if you’ll be able to make this payment on time, or maybe you want to change your payment date to a time of the month that’s better for you and not for your bank. This is one of those things you can take to negotiate with creditors, and it’s one of the easiest. Try and do this right after you’ve made a payment on your card so that you have funds on hand to make a payment if you have to, and so that you aren’t already in waiting for a payment that might make them think twice. One of the best cards you can have up your sleeve when negotiating with creditors is the one where you’re a responsible card user.
Change Your Interest Rate
The worst part of a credit card is the interest rate – and unfortunately, it’s what makes credit cards valuable for banks. Without it we just wouldn’t have a credit card! But how does that help you? Maybe you got a card that started with a high interest rate and things have changed, maybe you missed a payment a few months back and your interest went up – and maybe you want to change that. Give your credit card company a call and make a bluff (or maybe you don’t have to bluff at all). Credit companies are in a constant competition to get more consumers from one another and tend to offer low interest cards left and right. Chances are you have an offer for a low interest credit card already – if you do, don’t be afraid to tell the bank that you have an offer on the table, and you want to negotiate with creditors for a lower rate of interest.
Trying to Reduce Your Debt
Debt reduction is a trickier one – because it comes with a downside. Something might have happened in life that sucked up a lot of funds, or maybe something is happening now (a divorce, you’re sending a child to school, you’re going back to school yourself) that’s taking up most of your finances. You can try to negotiate with your creditors to get your debt completely reduced – you pay off a portion of it and are forgiven the rest. Sounds great, doesn’t it?
… well — it has a huge downside. The credit company obviously won’t enjoy that you aren’t paying back all of your debt, and that will reflect on your credit score. This is one of the tricks you want to avoid when negotiating with creditors.
Getting a Suspension of Payment
This isn’t as bad as the previous, but it’s still not your first option. You can speak to your bank or creditor in an attempt to get them to suspend payments for a few months while you get everything in check: if you normally make enough money to make your payments on time with some to spare, you might consider this. The downside is that your interest will still accrue on the balance for the time the payments are suspended, so you’ll be paying even more when they reactivate – and while you can keep negotiating with creditors, this is not the sort of thing you want to make a habit of doing.
A Few Final Tips…
- Know when you should negotiate. Timing is a big part of it: you want some leverage one way or the other, whether that’s from normally on-time payments to absolute financial hardship.
- Remember you need to talk to the right people: while customer service can do some things, you’ll want to speak to a manager for interest rates or debt reduction.
- Know that you, as a customer, have rights.
- Finally, know when you need to get help, and how to get it. If you seriously are looking at debt reduction, consider hiring a lawyer; but always be careful, and always look for federally approved counsel if you do go this route.