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How to negotiate better credit card terms

by Francine Huff

Can you really negotiate with your credit card company to get better terms? Maybe. But before you pick up the phone, be ready to make a strong case for why you should get a better deal.

Credit card issuers have the upper hand

Credit card companies have been in the driver's seat for quite some time, and it may be tough to get yours to agree to change the terms of your agreement. But the better your credit and payment history--and the more compelling your story--the more likely you are to get at least some of what you want, especially if you are patient, polite and persistent.

"The big [banking] institutions needed to keep their customers happy before the world changed in 2008," says Howard Dvorkin, founder of Consolidated Credit Counseling Services Inc., Fort Lauderdale, Fla.

"But now, depending on the quality of the customer and their experience with a particular banking institution, they may not want to keep that customer for a number of reasons. So it is a bit more of a challenge when negotiating these days with banks than a few years ago. Before you always had the luxury of walking, but now the banks may want you to walk."

Better credit card offers

If you try the tactic of telling your creditor that you've received better credit card offers and will take your business elsewhere, be prepared to follow through with the threat. "You have to be darn sure that if you say 'I'll close the account,' that you're ready to do so because they may close it for you," says Dvorkin.

It's also important to know what not to say when reaching out to creditors. It won't help your case if you complain about your personal situation or you come across as petulant, desperate or angry.

Dvorkin cautions that you should never use the words "I can't afford" when discussing credit cards. That could send an alert to the credit card company that you are overextended and result in your account being closed. "Tell them it's not competitive…that competitors don't offer a fee. Say 'I don't want to pay a fee anymore.' But don't criticize their products."

Good credit counts

So which customers are more likely to get a deal? Customers with excellent credit and consistent payment histories have the most leverage. They may qualify for lower rates, credit limit increases or extended repayment terms.

Interest rates and fees

What should you ask for when contacting credit card companies? "The interest rate will be the number one thing that the credit card company is going to try to offer…maybe the minimum payment," says Richard Call, community outreach advocate for Apprisen Financial Advocates, Columbus, Ohio. "But be extremely careful and make sure you get something in writing. The last thing you want to do is negotiate an interest rate reduction and lower minimum payment but have it reported to the credit bureau as unpaid."

If you want a low interest credit card, one approach is to ask for a zero or low-interest balance transfer offer that's good for a limited time.

Fees may be tougher to negotiate. Call says, "…a lot of credit card companies make their money…off the fees, so most aren't going to voluntarily give those up."

Rewards cards also may be tough to negotiate and more credit card companies are doing away with them altogether. "You really can't negotiate rewards programs per se, but in an effort to keep you as a client, the banks will sometimes give you another 20,000 points toward your rewards program, for example," says Dvorkin.

Good credit gone bad

People who have steady payment histories but suffer a sudden financial hardship may find a sympathetic ear when approaching creditors honestly. Credit card firms "truly are willing to negotiate terms if there's a true need on behalf of the consumer. But they're going to have to prove a need…and should be prepared to supply any evidence of a financial hardship," says Call. "Give a narrative of what's happened and what's changed. Have you lost your job? Have your hours been cut?"

Ultimately, credit card issuers hire people just like you to do a job. If you deal with them in an honest and straightforward manner and you have your ducks in a row, you stand a much better chance of getting the best credit card deal you can.

Published 09/22/11


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