Negotiating with Creditors

[Apr 16, 2008.]

If you're like most people, you probably feel helpless against your debt. You feel like there's nothing that you can do but pay and pay and pay until it's finally gone. However, there are some steps that you can take with your creditors that can help you become debt-free more quickly than you might imagine. And while these steps might seem like a little work, they certainly add up to big savings for you.

The first thing you need to understand is that credit card companies are businesses just like anyone else. They need the customer in order to make money for themselves and be successful. In short, you have more power than you think you do. You can see this need to please customers in the number of low interest credit card applications that you've received in the mail or heard about. Credit card companies want you to use their services because it means that you may have to pay interest at one point or another, which makes money for them over the course of your relationship.

Knowing that you have more power in this relationship begins to show you several things. For one, you can talk to your credit card company to see how they can make your relationship work better. If they want your business, they will need to work with you and your needs. This might come in the form of lower interest rates or a reduction of fees. To begin this process, you will need to have a good standing with this credit card company, meaning no late payments and a long history. This will show the company that you are someone they want to hold onto. You want to research other credit card companies to see what kinds of interest rates they are offering to new customers because you will see that these companies are competitive with each other, and that only works to your advantage.

With this information, you will want to call your credit card company and ask if you can speak to someone about lowering your interest rate. You may not need to speak to anyone else besides the customer service representative, but it never hurts to be upfront about what you want the phone exchange to be about. Talk about how you've been a loyal customer and that you feel that your relationship with the credit card company deserves a lowered interest rate for a period of time.

If they offer you a lower interest rate, write it down as well as the name of the person who offered it, and if it's satisfactory, that's all you have to do. If they do not, talk about how you might want to switch your balance to another company (name them) that is offering lower interest rates. Of course, you will want to make good on this promise if your credit card company is not willing to help you out.

When you lower your interest rate, this adds up to fewer payments on your part as well as more of your money going toward the balance rather than lining the pockets of the credit card company.