How to negotiate your interest rates

One of the quickest and easiest ways to find additional cash flow is by challenging the interest rates you are being charged, especially on any high interest consumer debt.  Negotiating lower interest rates reduces your monthly payments, creating additional cash flow and interest savings.  Interest rate negotiation deals primarily with credit card debt, or revolving debt accounts, and would not pertain to secured debts such as mortgages or automobiles, as they are secured by a physical asset.  By renegotiating your interest rates, you are challenging the interest that you are charged based on your credit score or financial standing, oftentimes resulting in a reduction of rates and payments. 

How to renegotiate your interest rates

1. To begin the negotiation process, you will want to compare the rate offered by your credit card provider with the lowest rates offered by all major credit card providers, which can be found at www.bankrate.com.  You should have this number available before continuing.
2. Contact the ‘customer service’ number found on the back of your credit card or monthly statement, and explain that you would like to discuss the interest rate on your credit account.
3. Upon being connected to the appropriate department, ask for the specific rate on your account and why you are being charged that rate.  You will probably be told that your rate is correct and cannot be lowered at this time.
4. If you are told that your rate cannot be lowered, try using one of the following responses.
• One, explain that you have been solicited several credit card companies and that they are offering rates much lower than the rate you are paying.  Don’t be confrontational but clearly explain that you have better options based on the interest rate that you are being charged, and that you will have to transfer your balance unless you get a competitive rate.  A quick word of caution, you better be prepared to transfer your balances in the event that your current credit card provider rejects your request.
• Two, in the event that your high rate is due to late payments or over limit charges, explain that you are currently participating in a comprehensive cash flow management plan and that you have automated all of your monthly payments.  You may need to arrange a time to re-evaluate your interest rates after you have had some time to establish a good payment history.  Be sure to set a date and don’t miss a payment.

Once offered a reduced interest rate, compare it with the lowest rate posted by your provider at www.bankrate.com.  Upon referencing the lowest possible rate, you will most likely be told that the rate offered is the lowest rate the representative is authorized to offer, and it may very well be true.  Upon hearing this, politely request to speak with their supervisor as there are usually several layers of management, each with specific authorization abilities to help create barriers between management and potentially upset clients.

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