If you’re struggling to pay down your credit card debt, but the bulk of your payment is going to interest, you probably need to look at making a change.
But first, remember that all credit card issuers are charging more than we like now. According to Bankrate.com the average purchase APR on fixed rate cards was 13.79% and was 14.35% on variable rate cards as of the week of September 16.
So if you’re paying less than that, consider yourself fortunate. If you’re paying more, or if you believe your high credit scores should entitle you to a lower rate, you can do one of two things:
- Negotiate a better rate with your credit card issuer
- Get a new card with a better rate and transfer the balance
Of course, the very best plan is to pay more each month and just get rid of that debt.
If your rate used to be lower and was increased after January 1, 2009, your credit card issuer is supposed to review your account every 6 months and reduce the rate if the reason for the increase has changed for the better. This was mandated by the terms of the Credit CARD Act. In addition, if your rate was increased due to a 60-day delinquency, the increase is supposed to terminate within 6 months if you make every subsequent payment on time and for at least the minimum due.
We all know that “supposed to” doesn’t always happen, so it’s worth looking into.
When you call to negotiate a rate reduction, you do run the risk that your credit card issuer will review both your account and your credit scores and decide to reduce your credit line and/or raise your rate on future purchase.
So before you make that call, be sure to check your own credit scores and know that you aren’t going to make things worse instead of better.
If you decide to go forward and get no satisfaction from the representative you speak with, ask to talk with a supervisor. Be polite, and outline the reasons why you are a valued customer who deserves a better rate. Cite your number of years with the company, your good payment history, or a frequency of use that puts money in the card issuers pocket. (They get paid on every transaction, remember.) If they aren’t interested in those reasons, then mention that you plan to transfer your balance to a different issuer.
Before you decide to jump ship, do your research into the credit card offerings and choose a new card with terms you like. Check for annual fees. Check the interest rate on purchases (just in case.) Look at the balance transfer fee and the interest rate on balance transfers. See if that’s a fixed or variable rate, and if it is promotional, how long it lasts.
Think about how long it will take you to pay off this balance before you decide to go with a “Zero interest” introductory rate. The rate you’ll pay later may more than offset your savings during the zero interest period, unless you can increase your payments and get that balance significantly lowered.
In other words, do the research and do the math before you make a decision.
Author: Mike Clover
CreditScoreQuick.com
