It seems that no matter where you go, debt always emerges as a crucial financial topic, and everyone wants to find ways to get rid of debt!
If you haven’t downloaded my budget spreadsheet yet, then you should do that now:
http://www.homebudgetbuddy.com/g/1009/budget-planner.html
So… Today’s message…
Get a better deal on your credit card so you pay less interest and get out of debt faster .
Here is a strategy that works like magic.
Get on the phone to your bank and instead of saying:
“I’m thinking about closing my credit card”
Say:
“I’m thinking about transferring my credit card balance to another bank. I thought I’d give you a chance to match it or improve before I ring around”.
Typically the bank’s first reaction is:
“no, no, not at all. We can’t do that. You have an existing contract with us.
And the magic words….
Say very politely “that’s okay, I’ve heard this other bank can do a better deal anyway”.
“Just wait, I’ll speak to my supervisor”. And the deal gets done!
I have done this myself. The best deal for me was to get a credit card interest rate reduced by 52.4%. That’s the rate reduced to half what I’d been paying. How fantastic is that?
This is not a task for the feint hearted or time poor! I recommend you have a cup of tea or coffee and something else to do while you wait (me, I’m doing bookwork while I’m on hold).
After being transferred back and forth and using the broken record technique (saying the same thing over and over until they get it).
The bottom line – persist.
So…if you are suffering from credit card stress, here is something you can do about it:
How to Reduce Your Credit Card’s Annual Interest Rate…
The following strategy will certainly save you money by cutting the interest rate charged on your credit card. It is based on the fact that banks want your business and know they have to compete for it . Not only that, it is bad for their sales figures if quotas are not met and bank staff are under great pressure to achieve sales targets all the time.
Even though you may feel you have been taken prisoner by the Credit Trap you will be surprised to know that you actually do have some bargaining power. I recommend you use it to get a better deal.
Here is what you should do:
Call your card provider and say, “I am thinking of closing my credit card account” (this is not a lie – I am sure you think of this quite frequently!). Ask, “What do I have to do to do that?”
From this point on you will have to be creative, but realise the staff member on the other end of the line wants to keep your business . Let’s face it you are paying them lots of money so they do want to keep you as a customer.
You will be warned that if you close your card you might be sorry. You will be reminded that you might NEED it one day and could regret closing it down. You will be put on hold and given the run around, but if you stay patient and keep the dialogue going by constantly saying you want to close your credit card, while sounding mildly unsure of that position, YOU are in the driver’s seat.
So long as the person you are speaking to feels they have a chance of swinging you around with a good offer you should be able to achieve a much better deal than you are getting now .
To give the person you are dealing with a sense that it would be worth their while to make you a better offer you might find it helpful to use lines like this:
“I know it will be annoying to have to contact the people I make regular automatic payments to using this credit card but I just don’t feel like I want to use credit any more. The world is in economic crisis and I just feel like it would be better if I pay the card off”.
OR
“I heard I could get a better deal at another bank. A friend of mine is only paying X%” (Of course, mention that you didn’t ask them which bank it is – unless you actually did do some research first).
OR
“I just thought I would give you the chance to make me a better offer, but if there is nothing better available then I guess all I need to know is how I go about completing the paper work.
Oh, by the way, what happens when I pay it out? Will there be two dollars interest to pay the next month and then one dollar the month after that?
I heard of someone who tried for months to close her account because there was always an outstanding few cents interest in the months after it was paid off. I heard he/she was ready to call a journalist and current affairs TV show because of how ridiculous it was getting.”
It is a good idea to keep the staff member thinking it would be in their best interest to improve the offer they are making in order to keep you interested in keeping the account. The longer you can do this the better.
This simple strategy can save you thousands of dollars . You are crazy if you don’t try it.
If you do use this strategy please reply and let me know what outcome you achieve.
To finish off today, here’s what happened to a Home Budget Buddy customer…
“We struggled for years to kill our credit card debt, and I mean really struggled – we were regularly hit with over-limit or overdrawn fees of $30 – $45 by my bank.
Eventually, through a move and change of job we were in a position to pay out the $4,500 balance, which we did with great pride. Then I phoned to close the account…
To cut a long story short, the bank did everything possible to discourage me: I was offered 1 year with no annual fee, then 2 years fee free and when that didn’t work, the interest rate that I had battled with for years of 16.9% was dropped to under 9% ; and it was pushed that I should keep the card just for emergencies.
I was livid. Even though the offers were great I was incensed that when we needed the help the most there was none (in fact the penalty fees made it much worse – did they really think for a minute that we were late or over-limit willingly!). I stood my ground and got the account closed but it wasn’t easy and the temptation could easily have been too much – luckily for me I was furious by then!”
So…armed with the above information I would wish you good luck but am fairly confident you won’t need any!
Until then
… to your bright and happy future.
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