8 ways to negotiate better credit card fees, interest and debt

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Personal Finance Writer
Consumer finance expert, author and “Opening Credits” columnist.


Credit card issuers aren’t
quite as rigid in applying fees and rules as many consumers believe, savvy cardholders and industry insiders say. Under certain circumstances and with the right approach,
cardholders may be able to have their interest rates, account fees or even
their balances lowered.

In fact, a 2017 survey conducted by CreditCards.com found that most who asked for better credit card terms got them. That includes 69 percent of those who asked their issuer for an interest rate reduction received it, and 82 percent were able to get their annual fee waived or reduced. 

However, credit card
agreements are legally binding contracts, so be prepared to make a compelling
case when asking for a compromise. Issuers are under no legal obligation to
bend the rules on what they can rightfully enforce, but depending on your approach
and situation, your card issuer might be open to a bit of bargaining.

Here are eight credit
card negotiation tips from the experts:

1. Stress the temporary nature of your need.

Before Bruce McClary was vice
president of communications for the National Foundation for Credit Counseling,
he worked in various credit card companies’ debt collection departments. There
he discovered that people who were in desperate but temporary financial
situations could persuade their card issuers to reduce finance charges by asking
for a hardship plan.

“Customers would call and ask about options,” says
McClary. “We had them, but people have to be specific about what they want.”

For
example, he says, explain that you would like your card issuers assistance for a fixed
number of months. If not being charged interest until March will help you get
back on track, ask for it.

If you want half a year with no payments at all so
you can secure employment after being laid off from your job, say so.

You may
have to meet in the middle, but most card issuers will give you some kind of a
short-term account alteration, McClary says.

2. Suggest a sensible debt settlement.

As with collection agencies, some credit
card issuers will strike a deal on the amount of debt that you owe.

Nate Masterson, director of
finance for Maple Holistics, says he has offered lump sums to credit
card issuers in the past and they’ve been accepted. How? By showing them the
money.

“You have to have the funds available,” says Masterson, who says to
start by offering that figure. “Good old-fashioned haggling can go quite a long
way given that you have a good case to make.”

To increase the potential of an
issuer agreeing to a settlement, calculate the amount you’ve already paid in
accumulated fees and prepare to point that out.

For example, if
your current balance is $5,000, but over the lifespan of the account you’ve
paid thousands of dollars in interest, you may want to
offer $3,000 today to
call it even. With a large and
lingering obligation, the card issuer may consider you a liability, so it might be a
relief to get the cash.

Note that the IRS considers more than $600 in forgiven
debt
as taxable income,
so check with a tax professional before exploring settlements. 

“Good old-fashioned haggling can go quite a long
way given that you have a good case to make.”

3. Appeal to the powerful.

The customer service representative who answers the phone can lower
an interest rate or waive a late fee
,
but don’t stop there for more complicated requests, such as payment suspensions
and balance reductions.

“You need to ask to
speak to a manager or the credit division,” says Jeff White, financial analyst for FitSmallBusiness.com. “A simple customer service rep isn’t
typically going to have authority to make these changes for you.”

Start by
calling the toll-free number on the back of your card and ask to be transferred
to the manager. If the rep is reluctant, politely but firmly insist.

In the
event you still can’t access a change-maker, visit the issuer’s website to
identify the company’s customer service executive. Email that person with a
summary of your customer experience and what you hope to have happen with your
account. Going straight to the top never hurts.

4. Know your card tricks.

Don’t want to pay a reward card’s steep annual fee? Contact the issuer and
haggle it out, says Jim Barron,
from Battle Creek, Michigan, who runs the personal finance website acceleratedfi.com.

“With Chase, I signed up for their Sapphire Preferred card because it came with
a huge sign-up bonus of 50,000 to 75,000 points that I used to take a trip,” says
Barron. “After the first year was up, I got charged the annual $95 fee. But you
can get this charge waived by downgrading your card.”

Contact your card issuer and
explain you want to keep your account, numbers, credit line and
accumulated
points but also want to eliminate the annual fee. Depending on the card issuer, you
may be able to switch over to a more basic product and retain your bank of rewards.

Switching to a no annual fee card also will also save you a healthy sum instantaneously.

If you’re worried the
negotiation will be too much effort, don’t be. “It was really easy to do and
not a hassle at all,” Barron says.

5. Bring up balance
transfer offers

If you see a 0
percent balance transfer card
to shift your debt from a current, high interest
card for a year or more, use that as a bargaining chip when negotiating
interest rates.

Tell your card issuer you’re considering a balance transfer, in which
case you’ll close the existing card, but you’d rather work with them to keep
the account open.

“Credit card companies are usually aware of their major
competitors’ offerings, so you should be, too,” says Calum Coburn, a consultant
for The
Negotiation Experts. “It will usually
be more flexible in negotiating fixed charges if they’re aware that a competitor
is offering you a better deal.”

Ask that your card’s interest rate be comparable to
what you can get with the transfer. Odds are they won’t bring the APR to 0, but
you may get a preferred rate.

Arm yourself with facts. As of January
2018
, the average “bad” interest rate is
23.59 percent, but it’s 13.07 percent for those with good credit.

It may
be financially savvy to stick with your original credit issuer anyway, as you can avoid
the cost of the transfer fee, which is often 3 percent of the balance and
tacked on to the amount you transfer.

If you want to improve your card’s interest rate or lower your
fees, then you need to persuade the credit card company that it’s beneficial to
the card issuer to do it.

6. Discuss a credit counseling
agency’s plan.

Nonprofit credit counseling agencies have pre-negotiated interest rate and fee
concessions with lenders. Many credit card issuers will reduce interest rates dramatically, with some even
eliminating interest altogether for credit counseling clients.

Late and over-limit fees might also be dropped for people on a debt repayment plan.

To learn
what’s available, book a free budget and debt appointment with an accredited credit counseling agency. With the
information you get from your counselor, you can ask your
credit issuers if they will match (or come close to) what you’d get if you
signed with the credit counseling agency.

If your card issuers say no, and you’re eligible for the credit counseling agency’s
plan, consider using it, McClary says.

Be aware, though, that there are
downsides to these credit counseling plans, too, including a monthly administrative of around
$25, having to close the accounts and agreeing to not enter into any new credit
accounts while under the plan.

7. Make yourself hard to resist.

“Credit card companies are like most
other businesses,” White says. “They want to reward
their best customers. If you want to improve your interest rate or lower your
fees, then you need to prove to the credit card company that it’s beneficial to
them to do it.”

You won’t have much leverage if you’ve had a long history of
spotty payments (especially in the recent past) or your credit cards are
maxed
out. If this your financial situation, concentrate on paying your bills on time
for at least a year and drive down debt with higher than requested payments.

After you have improved your credit and financial picture, you’ll be far more appealing to your card issuers. They’ll see that you’re
reformed and may want to grant you an interest rate break on the remaining debt
so they can keep you as a happy customer.

After all, when you have a good
credit rating, you can take your business elsewhere.

8. Prepare
to walk.

Not all
negotiations go smoothly, even when you’re in the right. In such a case, be
ready to play hard ball.

“I have a Citi 2 percent cash back
card and I got a notice from Mint.com that my card had just got hit with an
interest charge,” Barron says. “Even though I had the card set to autopay, there
was some glitch where it didn’t pay the full bill off so they charged me
interest.”

Assuming he made a mistake, Barron went back to the app to make sure
autopay was set correctly. A few months later Barron was assessed another fee,
and he discovered that it was Citi’s error, so asked for a refund. Citi refused.

“I told them to shut down my account and close all of my cards,” Barron says. “I didn’t want to do business with a company that had ripped me off. 
At first they said no problem, your account is closed. But about 24 hours
later, I got a new email saying the fees had been reversed.”

And then there are
also the negotiation “nevers.” Threatening an action that you’re not
really prepared to take is chief among them.

“You’ll lose credibility when you’re
forced to act and don’t,” Calum says.

Remember, no matter how much you may want
or need a break, the issuer holds all the cards, so do not be demanding, weepy
or obnoxious.

“Be low-drama and empathetic,” Calum says. “When you put
yourself in the shoes of the agent who’ll be serving you, you’ll hopefully
appreciate that too many people in a tight credit situation call up feeling
very stressed and either take this out on the agent, or are difficult to negotiate
with due to their unsettled emotions.”

Prior to any form of communication with
your issuer, calm down and act rationally and friendly. “Remaining
in rapport with the agent can be a very handy negotiation tool when navigating
choppy waters,” Calum says.

See related: Credit card debt negotiation in 3 (not) easy steps, 9 debt negotiation tips for introverts




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