Credit card debt is evil. While the cards themselves can offer great rewards if used responsibly, it is so easy to quickly get tied up in more debt than you ever thought reasonable or possible.

Making matters worse is the hard-to-understand interest rates that you are paying on top of your original debt.  The good news is that these same companies that do their best to confuse you also want your business.

And they have competition.

You can use this competition to lower how much you end up paying in interest and how long it takes you to do so. Here’s how to negotiate with credit card companies.

Find out what you’re paying in interest.

You can try finding this on your statement, but I would just call my credit card issuer to get this information. Legally, the credit card company is obligated to give you accurate information, including fully answering your questions about your interest rates and how they are applied.

There are two rate numbers you need to know: the prime rate and your rate over prime.  Add these two numbers together to get the total interest you’re paying on your debt.

Shop around.

The best place to start shopping is your mailbox. If you haven’t already thrown it away, go through that junk mail and see what kind of preapproved offers you have.  Many times you’ll come across offers that give you 0% interest for a promotional period if you have good credit.

This is a great bargaining chip, but make sure you know what the interest will jump to after your promotional period is over and what consequences there will be if you miss/make a late payment.  This isn’t something you’ll need to get into during negotiations, just something you should know for yourself ahead of time in case you do make the switch.

You can also do research online.  You needn’t apply for new credit cards.  Just check out sites that specialize in consumer finance and see what average rates are right now.  Then see if you can find any introductory offers.

Negotiate with the credit card company.

Review all of your research. Make sure you feel comfortable with it so you’re confident while talking to your credit card issuer. Call up customer service and insist on talking to a supervisor. Write down the supervisor’s name/ID number as making them accountable and more likely to be accommodating.

Then let them know what’s going on. You have received offers from other banks/companies, and, unless they can match the offers you’ve been given, you plan on taking your balance to a new lender.

These people want you to keep your debt with them. That’s how they make their money. But if for some reason this person says they can’t help you, ask to talk to their supervisor, again writing down names and ID numbers.

Remember to be polite through the entire process. Anger won’t get you anywhere.

Keep going through the ranks or keep calling back until you get what you need. Lowering your interest rate is important:  the interest is what’s keeping you in debt. So if at first you don’t succeed, try, try again.

If you really just can’t get anyone to help you, switch to that new lender. Take that 0% interest rate. Make all your payments on time. And if things start to get out of hand again, call them and try to negotiate.

Negotiate your interest rate–not your debt.

Some people will attempt to reduce how much they owe in total by offering a lump sum payment. For example, if you owed $10,000, the issuer might agree to take $8,000 all at once and “forgive” the other $2,000.

This is called settling your debt, and it is not a good idea for your long-term credit. It will show up on your credit report as a settlement, which will be a huge red flag for future lenders.

When you call in to negotiate, only negotiate on interest rates and then hustle to pay off that debt. Negotiating on your total debt, or settling, could have negative implications on your financial future.

 

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