How to negotiate lower credit card fees and rates.
Auriemma Consulting Group completed a study that showed many consumers are having success in negotiating lower credit card fees and rates. The percentage of people who directly negotiate with credit card companies now stands at over 20%. There are millions of consumers benefiting from lower late fees and other charges on their accounts.
The study shows that between 18 and 23 percent of cardholders have tried to negotiate some of the terms of their credit card plan, and many are having some form of success. With tens of millions of people struggling with paying their bills, more and more people are paying different types of charges on their cards, such as penalties, monthly costs and late fees. As these various expenses add up, these charges are causing more people to negotiate and ask for help.
The study learned that the most commonly negotiated terms are trying to waive or reduce annual fees. The second most common request is consumers trying to negotiate permanent interest rate reductions, but this one can be more difficult to obtain. More people are also contesting credit card late fees and other charges.
The percentage of individuals who are asking for help with their credit lines rose from 14 percent to about 25. Also, more people are asking for relief with late fees, as that is often the most expensive “extra” cost placed on borrowers. The number of those negotiating over late fees has increased to about 10 percent. Here are ways how to get relief and lower fees.
Introductory and so called teaser rates are often negotiable
Many credit card issuers and banks, such as Bank of America and Discover card, offer low interest rate introductory offers. When that low teaser rate expires, it is strongly recommended for the customer to make a quick phone call to the credit cards customer service department and ask to have it extended, or not reset at all. Most banks will look at the customer's account and history and decide what to do with the consumer. In many cases, the teaser rate will increase, but not to the standard interest rate.
The study indicates that a quick response time from the issuer may indicate whether they accept your request or not. After all, after the low interest rate expires, the chances are that the consumer won't wait around that long, which forces the issuer to decide and respond quickly.
Customer service can negotiate
Many credit card issuers and banks, such as HSBC and JP Morgan Chase, have provided their customer service teams the ability to directly negotiate credit card bills, fee, and rates. For many of these issuers the customer service representative who is on the other end of the 1800 call has some discretion and power to negotiate. Or they will offer another solution, and find more on credit card assistance programs.
Sometimes they can negotiate to conclusion, but sometimes they need to involve their supervisors. While this adds another step to the process, it should not discourage the customer. The supervisor may be called in to close the deal. Credit card rate and fees renegotiating rarely need more than a supervisor.
As expected, the level of response and flexibility will vary from card issuer to issuer. You will find that some customer service representatives for some banks are provided enough power to make and negotiate credit card terms on their own, in a rapid fashion. They will use information they have on file about the individual and also the data that needs to be provided by the customer asking for aid. Some issuers, such as Bank of America, make the renegotiation of credit card debt and bills as simple as a yes or no. But other companies will never do this.
How credit card issuers negotiate
While few banks and lenders are willing to give details on their process, or even confirm that they negotiate, some have provided details. One bank has stated that they review and examine a number of different scenarios, including the borrowers spending habits, finances, and over history when the customer calls. For example, whether the customer has been profitable to the bank or has been part of a good account with the lender is key. Some things they examine before negotiating fees or rates include :
- Do they have a balance on their account?
- Do they have a high volume of transactions?
- Is the credit card account a revolving account?
They are trying to decide if they can lower a customer's interest rate or fees without taking on additional risk. They conduct these reviews on a case by case-by-case basis for those that request it. If banks do lower rates, increase credit lines, or negotiate fees, the bank needs to ensure they are still profitable. After all, they are in business to make money.
If the individual is in serious trouble and may file for bankruptcy, they really should seek the advice of Consumer Credit Counseling Service, or some other professional such as a debt settlement company. It is recommended the person not attempt to negotiate themselves.
Annual credit card fees can usually be negotiated
Considering that most credit card companies still do not charge annual fees, this can be an advantage to the consumer. It would be unusual for a credit card issuer not to waive an annual fee if the borrower pressed for it as they are afraid the person will cancel their account.
So, negotiate the fact that competitors do not charge a fee, and you may switch card companies. You have argument in your corner. The study showed that you can usually talk them out of annual fees and the penalty rate.
A good history and habits will help your cause
If you did not follow the rules, it will be harder to get the bank to provide you relief and negotiate with you. While people do negotiate their credit card interest rates, fees, and limits themselves, it is still not that easy. If you have missed making a couple of payments on your card in the past, without a solid reason, then you may be considered higher risk. In these cases if you try to negotiate lower fees or new rates, then waiving the fees could be very difficult if not impossible.
Consumer Credit Counseling Service (CCCS) has indicated that for an interest rate or penalty to be changed or have a credit card fee waived, banks today are more willing to work with consumers than even just a few months ago. But this is only for select customers.
In addition to negotiating your credit card penalties and other fees, many creditors are now offering consumers hardship programs in which a credit card issuer will reduce the payment and interest rate for a period of time, usually six months. This will help the consumer get caught up on paying their debt. However, once that window is done, the interest rate and fees you need to pay will rise again.
Even today, many people are not aware that they can negotiate, that hardship programs exist, and that they can get help. However, the knowledge is getting out there, and people need to use these assistance programs to help them with debt.
A key to negotiating credit card debt is to remember that what is beneficial to the debtor (you) is sometimes not in the best interests of the credit card company. So you have to overcome that and make it worthwhile for the creditor to negotiate. Here are several helpful pointers for your credit card debt negotiations.
When you are trying to come to an arrangement to reduce or get rid of your debt, remember that the creditor - debtor relationship is often times one in which if one party benefits the other party stands to loose. While it is possible to negotiate your credit card debt yourself, and we provide helpful tips and methods to do that, always keep in mind that you can use debt negotiation companies, debt settlement plans, and counselors, and they may be your best option, as you will have a debt mediator to work with you on your situation and represent your best interests negotiating your credit card debt with your creditors. But here are some steps that might help you if you proceed on your own.
Debt negotiation steps
-Remember to think about and plan for a debt negotiation tactic from the creditors' point of view and their interests. Document and be prepared to address the possible points and concerns that your creditor or credit card company is likely to discuss with you during the negotiations process. Before you start the process, do your homework, prepare a list of concerns and possible issues (many noted below) that are likely to be discussed during the credit card debt negotiation process.
Research and find all the possible answers which can be provided as solutions to the creditor’s concerns. This all so important preparation will enable you to quickly counter your creditor’s concerns and denials and allow you to overcome them and proceed with further negotiations. Even better, suggesting possible alternative ways and means to get your creditor thinking about other possibilities like hardship credit card settlement programs or credit card debt consolidation plans you an opportunity to score something positive and gain the upper hand.
-One wrong approach is that many debtors think that they can basically force their creditors and credit card companies into offering debt elimination plans or waivers of their debt to help reduce their total outstanding credit card debt. This is a wrong belief and approach. There is not one creditors that is obligated to consider what is beneficial to you nor do they ever need to accept your conditions or terms. This best advice is to take a a gentle but straightforward and confident approach to your debt negotiations to help you create a positive impression about yourself, and it will help you pave a healthy environment for continued negotiations, and will help lead to success.
-Typically creditors are less than sympathetic to your financial concerns. Your credit card and other debt borrowings are just a number to them, and another source of income and they usually are not interested in listening to your personal “sob” story on the phone. So, be professional,, stay to the business facts, and be sure to offer creditors something tangible in exchange for their assistance with your debt. It is give and take.
-We hear cases of debtors who use the so called trump card of “Bankruptcy” and say they are filing for chapter 7 bankruptcy. While it is true that if you file a Chapter 7 Bankruptcy act, your credit card companies can’t get anything from you. The bankruptcy filing may also stop your from having to pay your credit card bills.
The downside is that a Chapter 7 filing may damage your credit status and rating for a very long time (several years) and it very well may prevent you from getting further loans, such as a mortgage or car loan, in the future. So while you can play the bankruptcy card with your credit card issuer, it needs to be a last resort. Instead of filing a bankruptcy, you can also consider a debt arbitration program. Click here to learn more.
-One little one trick is that you should try to negotiate your credit card debt towards the end of the month, since creditors like to resolve outstanding issues by the first day of the month. This tactic will enable them to keep their goals and numbers, as well as their bill processing process, clean through bill consolidation process.
-If you find yourself running out of options in the negotiating process, you may want to consider “subtly” reminding the credit card issuer that the long, intensive bureaucratic process of negotiations and debt recovery can consume a lot of their resources, time, and therefore cost them money. So why not get down to the issues, negotiate fairly right now and try to find common ground in which it is possible to communicate effectively and work out a solution to benefit both your and the credit card issuer.
-As you proceed thru the negotiating process, be sure to regularly review your credit report for any negative feedback, false reports or bad marks that may lower your credit score. If any are included on your report, you then also need to negotiate this with your creditor to remove the bad marks from the credit report. Always be sure to check your credit report, and stay on top of it, in the following months to make sure that your request has been addressed and that no new bad marks have been put on the report.
-If you find yourself running out of time, or do not have any success, a credit counselor may be able to help. Find a listing of credit counseling agencies.
These are several valid points and steps that have been show to be very useful and helpful when negotiating credit card debt with your creditors. Good luck, and always remember that you can also turn to a professional to help you eliminate and consolidate your debt.
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