I'm never going to stop talking about this
It is just too important and can save people too much money. Here's what you need to know.
Hi there, my friend.
I’m going to get right to it…
83% of people who asked for a lower interest rate on one of their credit cards in the last year got one, according to a new report I wrote for LendingTree. The average reduction was nearly 7 points.
That’s like lowering your interest rate from 25% to 18%. It’s a big deal.
How big a deal? Consider this…
Say you have $5,000 in debt on a credit card with an interest rate of 25%, which is just a little above the national average rate on a new car today, and you pay $250 on the card each month.
Assuming you don’t keep spending on the card, it will take you 26 months and cost you $1,535 in interest to pay that balance off.
Now, say you call your credit card issuer and you’re able to lower your rate by seven points, down to 18%. At that rate, if you pay $250 per month on that same $5,000 balance, it’ll take you 24 months and $989 in interest to pay off that balance.
That is a savings of two months and $546, just for making a phone call.
The bigger the debt, the more you can save. Shrinking your rate can literally cut years and thousands of dollars off your debt payoff, depending on how much you owe. You can run the numbers in this credit card interest calculator to check my work or input your own to see how much you could save.)
Think that’s worth your time?
I’d say so.
That’s why I’m never going to stop talking about this until every single person with credit card debt knows that this is possible. I’ve done more interviews about this topic than I could possibly count, and I’m just going to keep doing more and more. It is just too important and can save people too much money, so I can’t keep quiet about it.
Heck, previous years’ versions of this survey were what inspired me to write my book, “Ask Questions, Save Money, Make More: How To Take Control Of Your Financial Life.”
Not just for folks with amazing credit
That’s right. This isn’t just a one-year phenomenon. We’ve done this survey for years at LendingTree, and the success rates have always been sky-high.
Those success rates hint that it isn’t just people with 800 credit scores and long track records with their credit card company who get their way. Regular people who really need the help do, too.
Card issuers don’t just give breaks on interest rates, either. At least 85% of people who asked for a waived late fee, a higher credit limit or a waived or reduced annual fee got their way, too.
Now, don’t get me wrong. There’s no guarantee your request will be granted. If your credit is terrible, it will likely hurt your chances. If you’ve asked four times in the past year to have a late fee waived, they may not look too kindly on that. (Mostly because it means you pay late pretty often, which no bank likes.) If your annual fee is several hundred dollars, it might be less likely to get waived altogether. Or perhaps you speak to a customer service representative who has been yelled at 10 times that day, is at the end of their shift and is just not in the giving spirit. This stuff happens. However, at least you gave it a try. Nothing ventured, nothing gained, right?
Plus, remember: It is in the bank’s long-term interest to give you these breaks. They want you to stick around because the longer you’re a customer, the more money they make off of you. For example, if they waive a $30 late fee, it creates so much goodwill that you’re likely to keep spending on that card for a long time. As you do, the bank ends up making far more than $30 off of you, thanks to fees, interest and other costs associated with that card.
So, ultimately, the house always wins, as the saying goes. But that doesn’t mean that you can’t walk away with a little extra cash in your pocket every once in a while if you try.
4 tips to help you do it
It’s all about information. Got a credit card offer with a good interest rate in your email or snail mail lately? Remember it. Noticed when you look at your card issuer’s website that you aren’t getting the best rate that they’re offering? Make a note. (Here’s an example of a page where a giant bank lists all of their cards and the possible interest rates associated with those cards. Other banks and credit unions typically have something similar.) Know that your credit score has gone up recently but you haven’t told the bank? Change that. All of these things can help you frame the conversation.
“Hi, I have a card with a 25% interest rate, but I saw on your website that some people are being offered a rate as low as 18%. Who on your team can I talk to about getting my rate lowered?”
Script it out. My book includes word-for-word scripts on how to ask for so many breaks from your credit card issuer, as well as other financial moves. However, if you haven’t gotten your copy yet, you can still write down what you’d like to say. Don’t worry about anticipating every single thing that could possibly happen, though. Thinking through how you’ll start the conversation, what personal details to add and how you might handle a few possible questions from the rep can go a long way to helping your confidence. You can even consider role-playing with a trusted friend to take that practice to the next level.
Don’t be a jerk. People want to help people they like. It often really is as simple as that, so be nice. That doesn’t mean that you should be a pushover, but it does mean that you’re probably better off skipping the alpha-male BS bluster.
Don’t be afraid to try again. The first answer isn’t always final. Sometimes you catch someone on a bad day, for example. Maybe you forgot to mention an important detail. Perhaps you didn’t think to ask to speak to the manager. Calling back and trying another time or two when you’re rejected probably won’t hurt. (After the third or fourth rejection, however, it may be time to take the hint.)
Before you go…
I am so incredibly proud that Vicky Nguyen chose to write the foreword for my book. She’s the anchor on NBC News Daily and the Chief Consumer Investigative Correspondent for NBC News. You can see her all the time on Today, NBC Nightly News and elsewhere asking the tough questions and doing great work helping people better manage their money and advocating for them when they need it most. (She’s also who I’m speaking with in the image at the top of this post.)
Now I’m honored to recommend her amazing new memoir, “Boat Baby.” Here’s how it is described on Amazon…
“In a memoir where heroism meets humor, NBC News anchor and correspondent Vicky Nguyen tells the story of her family’s daring escape from communist Vietnam and her unlikely journey from refugee to reporter with laughter and fierce love.”
She talks more about the book and the experiences that inspired it, here in an interview with NBC Bay Area.
I’ve spoken with her so many times over the years and am so thrilled for the success that she’s had. She’s touched so many lives through her work as a journalist and now through her memoir, and I’m sure she’ll continue to for years to come.
I can’t recommend her book highly enough. Go buy it today!
Until next time!
Matt
Very insightful Matt and certainly something to return to from time to time. I have a couple calls to make ;) thank you for sharing!