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So far we’ve talked about what types of cards there are and how credit card companies make their money. The next lesson in our Credit Card 101 rundown is to introduce a few ways on how to reduce your payments. Some people take advantage of these tips and other people are unaware that doing such a thing was even possible. One thing to remember…credit card companies hate to lose a customer so they are sometimes willing to give a little in order to keep you around.
Sometimes all it takes a phone call and a little bit of courage to get a drop in your interest rates or work out some other sort of deal that can help you out long term.
How can I reduce my payments?
- Ask for a lower rate. Because the credit card market can be extremely competitive, your current company will probably be willing to lower your rate if you simply just call and ask. Especially if you tell them that you’ve been looking around and have found better offers from other companies. Don’t be threatening or angry when you call, just explain you’ve found such-and-such a card that has “x” annual rate and you’re thinking of changing to them unless your current company can offer you a reason to stay.
- Explain you are in financial duress (if you are). If you are finding that paying your minimum payments is even out of the question, call and talk to customer service. If you explain that you believe you are having a hard time making payments, they will sometimes help you by dropping your interest rate rather low in order to help you make payments. They would rather drop your rate than end up having to write off your account when you file bankruptcy.
- Consolidate. If you are able to get your interest rate dropped significantly and you have enough room on your card to transfer other debts to it, this will help you also. By moving your higher interest rate balances to your lower interest rate card, you will be able to track your debt in one place (rather than multiple cards) and be cutting back on the interest you were paying. Some cards even offer 0% balance transfer deals for a certain amount of time, which can be beneficial.
- Credit Card Hopping. This method is one I wouldn’t recommend so much because it can really mess with your credit score by having multiple accounts opened and then closed. Essentially, you open a new credit card that has all the bright and shiny introductory rates and such. You transfer your balances to this card and often pay 0% interest for a year or so. Once you’re getting close to the introductory period’s ending, open a new card with 0% interest and transfer your balance to that card. This ensures you will be paying no interest, but like I said…your credit report will show many lines of credit opened in your name and if you don’t close them, they still show as an open line of credit. I can only assume this can’t look good.
There you have it. Four ways to save money on your credit card payments, some better than others. Next time we’ll take a look at incentive plans and whether or not they are worth it. What have your experiences been with any of the above ways to reduce payments?
