Credit Cave

This is our seventh and final installment in our series designed to help people prepare for a phone negotiation with their credit card company to reduce their interest rates and save money in the long run.

Our final three points for this series close things out in a way that is similar to our beginnings. These suggestions are some what basic but can be very important. They both speak to the need to insure that you get comfortable on the phone, stay comfortable and keep as many advantages as possible during the discussion with the credit representative on the other end of the line that could save you thousands of dollars.

Get Comfortable

The first thing that you should do before making the phone call is to get a headset or use some other hands free device for your phone. You will need to be comfortable and flexible when you call. Use an ear bud or headphone with a mike so that you can talk hands free. This will make it possible for you to manage your notes, computer, files or anything else that is important or might prove to be distracting.

Keep in mind that the operator you speak with will have one and will be working on a computer so give yourself the same advantage.

Outnumber the Call Center Representative

Next, bring someone else into the room during the conversation or put the call center person on speaker phone with your spouse, significant other, or parent. A conversation with two people on your side versus one slightly skews the conversation in your favor. You now outnumber the credit card company representative. Two brains are better than one. Use them.

Ask your spouse or relative questions as the conversation develops.

1. Does that make sense?
2. What do you think?
3. Is that really a better deal?
4. Should we accept the other offer?

Show the representative that the other person is influencing your decision. Now they have to convince both of you and work a little harder. That gives you an advantage and decreases the chances that you will miss an important detail. Plus, if a supervisor comes on the line, the match up will be even and you will not be out numbered.

Record the Call to Practice for Next Time

Finally, ask the representative if you can record the call and then record it. This will give you a record of the conversation. It serves as proof to any deal you might be offered. Probably most importantly, it gives you a record so that you can study your performance and make improvements or modifications the next time you call to negotiate a better rate on this credit card or any other!

For More Information see:

Part 1: Prepare Before You Call Your Credit Card Company for a Better Interest Rate

Part 2: Credit Curb Appeal for Credit Card Rate Negotiations

Part 3: Paying Down Debt Positions a Better Rate Negotiation

Part 4: Researching and Scripting the Pitch to Lower Your Credit Card Rates

Part 5: Credit Footprint Improvements Prior to Rate Negotiations

Part 6: Organizing All the Angles before Negotiating a Better Rate

Last time we discussed the benefits of rebalancing your debt load. This time we need to take a half step back and employ a very useful tactic.

Three Way Negotiating Dynamic in Your Favor

Before you actually transfer a balance, call the card where the balance resides and tell them you intend to transfer a portion of your balance or the entire balance if that is the case, but be specific. Then ask the company holding the balance today to give you a lower rate before you use the balance transfer. This will save you a cash advance fee and that can be very important even if they are only matching the rate!

You should also ask for a lower regular rate as opposed to a teaser rate. Tell them that you would like to keep things where they are not just for the next 3-6 months, but until the balance is paid in full.

If they can’t give you a lower regular rate then ask for a teaser rate and if that doesn’t work, then transfer the balance.

Know Your Credit Report

Order a copy of your credit report and study it in detail to understand how you will look to your credit card company at this point in time. Keep in mind that they will look at your history covering all of your creditors and not just your single account with them. If you find any errors or omissions, note them and take actions to correct them, but be ready to describe them on the phone and fill in the gaps. Similarly, if the credit report lags behind the actual status of your accounts by a month or three, be ready to do a fast reconciliation explanation on the phone.

For More Information see:

Part 1: Prepare Before You Call Your Credit Card Company for a Better Interest Rate

Part 2: Credit Curb Appeal for Credit Card Rate Negotiations

Part 3: Paying Down Debt Positions a Better Rate Negotiation

Part 4: Researching and Scripting the Pitch to Lower Your Credit Card Rates

Part 5: Credit Footprint Improvements Prior to Rate Negotiations

This is our fifth part in our series describing the steps that you can utilize to prepare for a future Credit Card Rate Reduction.

Today we are going to focus on three areas. Reviewing your total footprint on the credit card company you will negotiate with, transferring balances to ‘balance’ your debt load percentages and avoiding the balance transfer trap.

Total Foot print with a Bank or Credit Card Company

If you have more than one account with the same bank, review those accounts as well. With the mergers and consolidations it is not unlikely to have multiple accounts with the same company. Review the big picture of your relationship with this bank and discuss it with the agent on the phone.

Rebalance your debt burden so that none of your credit cards have balances in excess of 80% of your Credit Limit.

Consolidate your debt utilizing balance transfers. Move your outstanding balances to your cards with both:

1. A low fixed or adjustable rate before the balance transfer incentive, and
2. A good balance transfer incentive

Avoid the Balance Transfer Trap

Do not transfer your balance to a card with a teaser transfer rate when the normal fixed rate is higher than the card you are currently paying today.

It’s a trap. The credit card companies are counting on consumers to screw up and borrow more at higher rates. There is a reason why they offer those rates and its not to get your business, its to get your business plus interest. They know they will profit from you in the long run.

Don’t skip a payment on a card just because the balance transfer covered your minimum for the month. Pay anyway. It lowers your total debt balance which is good!

For More Information see:

Part 1: Prepare Before You Call Your Credit Card Company for a Better Interest Rate

Part 2: Credit Curb Appeal for Credit Card Rate Negotiations

Part 3: Paying Down Debt Positions a Better Rate Negotiation

Part 4: Researching and Scripting the Pitch to Lower Your Credit Card Rates

We have been covering the steps you need to take to prepare to successfully negotiate your credit card rates down. Today, we start to build your case. In general, you need to gather the facts and then prepare your message in a script.

Research Your Accounts

Review your Accounts in detail and compile that information in a place where you can find it and use it when you make the call.

If you have accounting programs like Money or Quicken, run reports and calculate the total amount of interest and fees you have paid on this credit card over the life of the card.

Run the same reports for the last 5 years, the last year and the last 6 months.

Gather up the facts about your recent progress

1. If you have made a payment and its in the mail prepare to mention it.
2. If your income has gone up or your expenses down, note it.
3. Be prepared to make your case with this information too.

Prepare a Script

After you have read all of our Preparation instructions including what to do and say on the call and what not to do.

1. Then write or type a legible script of your opening statements, your detailed request and reasoning, and several individual pages for potential standard responses if they say no. Think of these responses as mini scripts.
2. Memorize your scripts.
3. Practice your script with your spouse or a friend on the phone. Remember the person taking your call at a call center is trained and experienced at doing this every day all day, you are not. You need the practice and you need it on the phone!

Next time we will look at some of the additional complications that are present for many debtors and how you can prepare for those details as well.

For More Information see:

Part 1: Prepare Before You Call Your Credit Card Company for a Better Interest Rate

Part 2: Credit Curb Appeal for Credit Card Rate Negotiations

Part 3: Paying Down Debt Positions a Better Rate Negotiation

Last time we mentioned that your credit card rate negotiation will benefit from paying down your debt and boosting your income. Now its time to cover the obvious step that every body hates.

Stop Spending So Much

It’s the discretionary income that really makes the difference. If you earn a $100k a year and spend $120k you are worse off than someone that earns $30k and saves $10k, but you have more potential to turn things around. From a financial perspective its easier to cut costs and expenses than it is to boost your revenue. Psychologically, it’s a different story, but force yourself it will help.

Before you make the call work hard to decrease your expenses. There are a number of things you can do to decrease your expenses and divert some of those funds towards your credit cards. These are just a few:

• Stop dining out all together
• Buy cheaper food at the grocery store
• Take your lunch to work
• Don’t go shopping for anything but necessities
• Stop renting movies
• Drive less to save money on fuel and wear and tear on your car
• Drop your cell phone plan down
• Drop your cable package down or cancel it even if its just for the summer.

Why?

All this work to decrease your expenses can make it possible for you to get your balance down further and faster. That might bring your outstanding balance down to a percentage level that allows the credit card company more room to offer you a better deal. Paying down your credit card is the overall goal anyway, and so it helps no matter what the result of your rate negotiation.

What’s coming In our next installment?

We will cover some of the research needed and start to talk about ‘The Script.’

For More Information see:

Part 1: Prepare Before You Call Your Credit Card Company for a Better Interest Rate

Part 2: Credit Curb Appeal for Credit Card Rate Negotiations

A few days ago we prepared an article providing the useful tip that it only takes a little negotiation to get a rate decrease on one or more credit cards. Since then we have received several requests to elaborate on this topic more and we have prepared this article to provide a more comprehensive strategy for decreasing your credit card rates through negotiations with current and new credit card companies.

This process can be done off the cuff with a simple phone call and a request, it never hurts to ask or you will definitely receive nothing. A rate reduction can save you hundreds if not thousands of dollars, which can make it very important to many people.

So we will cover are going to cover 15 steps in multi part series to prepare you for the call. Future articles will cover even more strategies and tactics that you can use. Lets face it something that can save you thousands of dollars in compound interest is worth a little more investigation!

The Test Run Option

Now, I do not recommend calling without preparation but it won’t hurt much and will give you some practical experience. If you fail come back and do the preparation we recommend and improve your odds of succeeding. Do not wait forever to make things ‘perfect.’ If they were perfect, your debt would be paid off you would be able to use cash to make your purchases and the call would not be necessary.

Getting Serious

If you tried the test run or not the first thing you need to do is a little soul searching. You are going to be negotiating to save yourself thousands of dollars. That is like trying to talk yourself into a free car. You need to understand your own position and motivation and perspective. So our first tip is to ask yourself if you want to change to a different credit card company if you do not get a better rate?

1. Consider their customer service.
2. Consider how often they have increased your rates in the past.
3. Consider how many penalties they have charged you.
4. Consider how many balance transfer fees your have been charged and if they were reasonable.

You need to understand just how serious you are about your effort before you proceed. Everything that we will cover in the future will be determine by your goals and attitude, which will come across on the phone!

Well after months of expectation, the Bank of England committee decided to raise the base rate of interest in the UK to 5%, that’s the highest it has been in 5 years.  Now, while that may seem a negative figure, please take into consideration how high interest rates were during the late eighties and early nineties.

So why did they do it?  To keep down the growing rate of inflation, consider the rate increase as one way of being cruel now to be kind later.  If inflation continues to climb consumers will end up priced out of the property market and stop spending in the shops.  Well, at least that’s the reasoning behind it.

To be honest, I will feel the pinch once this comes into affect.  My interest only mortgage will see a nice rise month-on-month, but we will be able to cope with it just like most others.  It’s the people who are in deep debt with bad debt on credit cards and store cards who will feel it most, which will probably be reflected in the number of bankruptcies in the coming months.

The bad news, if a rise in interest rates isn’t bad news enough, is that most city analysts are calling for a further rates increase to 5.25% in February 2007.  And if the rate increases after that I think the UK economy will really be in trouble.