Monday, August 30, 2010

G.O.O.D. Tip #2: Get angry — raise a little hell

When I was stuck in credit card debt, I was being buried alive by my 19.99% interest rate. In February I calculated that I had been charged more than $1,000 dollars in interest in a single year.


I can think of about a million better ways to spend $1,000, including throwing a thousand dollar bills into the air in a crowded bar just for the heck of it.

If I could do it all over again, that is what I would do with that $1,000. Maybe someday. Dream big!

Anyway, once I realized how much my interest rate was hindering my efforts to pay off the credit card, I know I had to call my credit card company and ask for a lower rate. Normally I wouldn't do this because I hate confrontations, but the $1,000 issue ignited a fury in me. Sure, it was my fault that I didn't pay closer attention to the mounting interest, but I still felt robbed.

If you need a little incentive to badger a customer service rep into lowering your interest rate, gather several of your old credit card statements and add up the interest. Get upset. Get your dialing finger ready.

I went into my phone call armed with several reasons why I deserved a lower rate:
  • I had been a good customer for four years.
  • I had never exceeded my credit limit.
  • I had always paid on time.
  • At this point, I had been paying well over the minimum amount due for several months.
I also decided against using a tactic that some online sources suggest: telling the rep that I had gotten some great credit offers with lower rates and I was ready to switch to another company. I didn't want to risk having the rep ask me what the offers were. I didn't want to give him a specific number in case he was prepared to offer a lower one.

I have a terrible poker face, but I know how to hold my cards close to my chest. Sometimes.

Instead, I chose to be honest. I said, "Hey, I'm trying to pay down this card and the interest rate is killing me. What can you do to help me?"

Of course, the rep gave me the runaround for 10 to 15 minutes. He kept saying that a lower rate was "not available at this time," as if there are a limited number of lower rates that they just give away until they run out. Oh, please.

That's when I busted out my polite threat. I told him that I would immediately close the card if he didn't give me a lower rate. He kept saying he couldn't. I then asked for a manager at least three times before he transferred me. I kid you not, his sigh of defeat was audible.

This manager must have known I was already upset because he immediately offered to slash my rate to 9.99% for six months. I was blown away because I never thought I would get 10 percentage points shaved off, so I accepted the offer without negotiation. I didn't want to screw it up somehow. Also, I knew I would be able to pay the card off in less than six months, so the limited time span didn't matter too much.

If you're an excellent negotiator and feel like twisting the knife a little, you can ask for an even lower rate or a permanent reduction instead of a "promotional" reduction. The awesome financial blog Get Rich Slowly has a great article about negotiating here.

I thanked the manager profusely, asked when the rate would go into effect (on my next statement), and wrote down his full name, job title and employee number. I was prepared to hunt this man down if I didn't see the rate reduction go into effect.

I was very serious about this, people.

And you know what? It completely worked. My interest rate was reduced as promised, and I paid off the card in less than six months. I bet the rate has now gone back to 19.99%, but luckily 19.99% of $0.00 is... $0.00.

If you have credit card debt, please ask for a lower interest rate immediately. Do some research, choose a tactic and be prepared with examples of why you're such a shining customer. Be polite. If that doesn't work, make a polite threat. If that doesn't work, ask for a manager. If that doesn't work, hang up, wait 15 minutes and call back to work on someone else.

And why stop with your credit card? You may be able to get a lower price for cable, a fee waived by your bank or a raise from your boss. Read this article, via Get Rich Slowly (I'm obsessed),  to see that all you have to do is ask. As the author writes, "Asking has no consequence worse than 'no'. And you'll be surprised how often the answer is 'yes'."

The next tip can help you curb your spending and stick to your budget. Be on the lookout for G.O.O.D. Tip #3: Get thee to an ATM — start paying with cash

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