Negotiating With Credit Card Companies Can be a DIY Project

Negotiating with credit lenders is becoming more and more common in these days, but this was not always the case.

There was a time when people who found themselves with too much credit card debt would apply for loans advertised as “debt consolidation” or take out bank loans to pay off their high interest credit card balances.

Credit was easy to get and as long as you didn’t rush out and charge up the credit cards a second time, consolidating the cards into one low interest loan made sense to eliminate credit balances.

The risk is that you will continue to make charges against the credit cards and end up with more debt from both a consolidation loan and new credit debt.

Often Ignored

One option open to you is to pick up the phone and learn “the art of negotiating with credit companies” for better terms on your account.

This option was often ignored prior to the economic crisis as it was easy to find a new credit card and transfer your balance with fees waived and a great low interest rate for up to a year on the new card.

Many people transferred their credit card balances time after time and were able to pay down the amounts much more quickly with the specials offers of 0% or very low interest offered for a period of time.

Those offers of great rates and suspended transfer fees were designed only for one purpose – to increase the number of accounts for the credit card company. As the credit market tightened, declined and then crashed the special offered disappeared for all but those with the highest credit ratings.

If you can’t move your high interest balance to a new card you might be able to negotiate with your credit provider. This doesn’t mean trying to pay less than you owe but rather an attempt to get better terms for the account you have.

Thoughts To Bear in Mind

Negotiating with credit lenders requires patiance and education. It is therefore important to first decide what outcome you would like to have. Write down the questions and practice on them a while. Once you feel comfortable, pick up your phone and make the call.

  • Is the interest rate higher than you think it should be compared to other cards
    advertised or changes in the marketplace? If you are paying your balance down over time, a lower interest rate will save a lot of money for you.
  • You may have as your goal to reduce your interest rate?
  • You could also ask for an extension of a 0%?
  • How about asking for a special offer low rate for an additional six months?

It doesn’t hurt to ask and to mention that you considered moving your balance to another credit account but thought you first talk to the lender about possible solutions.

Increasing Your Credit Card Limit

If your credit card limit is $7500 the $5000 balance doesn’t reflect well on your credit file. If you have a good payment record you may ask your lender to increase your credit limit.

If they are willing to raise your limit to $10,000 you instantly improve your credit standing as you are using only 50% of your available credit.

If you have a bad credit rating you may think you can’t negotiate – but you would be wrong. If your difficulties were caused by illness or job loss and the problem is now in the past, you have a solid chance of getting what you want.

With marks on your credit record you may not have the opportunity to apply and get a loan to consolidate credit cards while you put your financial life back on track.

If you can present your case and show that the problems are in the past you have a good chance of improving the terms of your present credit card account. Make sure to read our guide on how to pick the right debt management service for your needs.