"Your Credit Cards - Making the Numbers Better for You"
by Eddie Patin
If you have a credit card or two (or five), there are ways that you can make those credit cards work better for you--or at least not hurt so much. I am talking, of course, about getting those banks to give you better interest rates and higher limits. This is leaning more and more towards 'common knowledge', but it is still surprising today how many people don't know that, with a little time on the phone, you can shift the 'numbers game' the banks play a little more in your favor.
Better interest rates (a.k.a. your APR) means that the payments you make will be going more toward paying off the principal (what you actually owe) than being flushed down the toilet as interest paid directly to the credit card company. The lower your interest rates are, the faster you can pay off your debt, and the more you can (responsibly) use your credit cards for acceptable 'good debt', such as certain investments that will yield a higher return.
(Note: I'll get more into 'good' debt and 'bad' debt in another article.)
Higher credit limits will do a few things. First off, it will give you more available credit, but that could be a bad thing for you if you can't be responsible with your spending. Second, having higher limits will help your credit score. One of the things your credit score is judged by is the percentage of debt you have compared to how much total available credit you have. So, if you owe $1100 with a limit of $1500, your credit score will improve if you can raise that limit and suddenly owe $1100 with a limit of $3000. Lastly, higher limits will give make more credit available for investing with 'good' debt, which, as I said, I'll discuss another time.
So how do you lower your interest rates and raise your limits?
Here's the old way, which was amazingly simple, and seems to work less and less these days:
Call your credit card company. Talk with a representative.
"So how can I help you today?" "Can I speak with your supervisor, please?"
"Sure ... hold on."
"This is so-and-so. How can I help you today?" "Yes--what is my current APR?"
"Your APR for purchases is ... (interest rate)." "Okay ... I just got a great offer from another company, so I'm doing a little cleaning house on my old credit cards. Could you lower that interest rate, please?"
- (Wait ... don't say ANYTHING until he/she speaks.)
"Okay. Your interest rate is now (interest rate)." "Thank you. And what is my credit limit?"
"Your limit is currently (credit limit)." "I'm looking at making a large purchase this month, and that won't be enough. Could you increase my limit, please?"
- (Wait ... don't say ANYTHING until he/she speaks.)
"Okay. Your credit limit is now (new limit). Anything else I can help you with today?"
If the person (supervisor) you're talking to gives you any resistance to these requests, simply ask to speak to their supervisor, and repeat the process.
As I said, this script (tried and true) seems to be working less and less these days, but it's still worth a try. At the very least, you'll learn a little bit about your credit card (make sure you always know what your balance, interest, and limits are), and how much that company cares about their customer service. If they give you too much trouble, or seem too greedy, you'll probably want to open up a new card elsewhere and transfer the balance over.
I suspect that the credit card companies are less and less concerned with customer service these days because they know that they are in a position of strength, and have no need to keep their customers happy. If we owe a balance, then we're legally required to pay off that balance, and the less service-oriented credit card companies (like Chase*) have no incentive to treat us any better than indentured servants.
If you do try this script and come back with the feeling that a particular credit card company is no longer concerned with good customer service, then pay off or transfer off that balance as soon as you can. The only way to punish such banks and make them treat their customers with care and respect is to take away their business.
It will be a lot easier to get a lower APR and higher limit if you yourself come from a position of strength. That is why the next strategy has also been fairly popular in the past. When starting a new credit card account (or trying to get what you want with an older one), use that credit card for six months or so for various purchases--whatever, but make sure you pay it off after every month. Or, if you use the new account for a balance transfer, pay that transfer off before trying this. Either way, new or old account, you must approach this strategy with a zero (or very low) balance.
(Get a hold of a supervisor like before.)
"This is so-and-so. How can I help you today?" "Yes--what is my current APR?"
"Your APR for purchases is ... (interest rate)." "Okay. That's too high. Now that I've been using this card for a while and have no balance, I'm going to need to see that significantly lowered if I'm going to keep this account open. Will you lower it?"
"Okay. Your interest rate is now (interest rate)." "Thank you. And what is my credit limit?"
"Your limit is currently (credit limit)." "Alright. Well, that's too low, and it's not going to be very useful to me. For me to keep doing business with you, it'll have to be at least (throw out a reasonable number). Will you change it?"
"Okay. Your credit limit is now (new limit). Anything else I can help you with today?"
Remember--in this strategy, your angle is coming from a position of strength. Now that you don't owe anything, they've got nothing to hold over you, and every incentive to (reasonably) do as you ask. You're strongly hinting that if your interest rate and limit does not improve significantly, you have no further reason to use the card and will close the account.
This is how people have successfully changed their rates and limits for years. However, today, some banks (like Chase*) might throw the latest BS at you: "We can't change rates/limits (over the phone / at personal request) anymore. It's all done through our system, where your account is automatically considered every six months, blah blah blah." If you do encounter such a response, and can't get anywhere with their supervisor, then you're better off closing that account, because if they act like this when you have all the cards, imagine how they'll act when they have the power.
After you go through these steps with all of your credit card companies, make sure to record your current balance, interest rates, and credit limits. The first step in eliminating your debt and getting your finances under control is to know where you stand. When you have all of your debt information recorded (and kept up-to-date), you'll be able to create and follow your strategies to pay them off, you'll be able to keep track of the time-tables for special rates and balance transfers, and you'll be able to prioritize your accounts.
So, lower those interest rates and raise those limits. And if you raise those limits, do NOT just fill up that new available credit with more debt. If you find out anything interesting or any new strategies that have worked for you, please feel free to email me, and I may add them to the DEBT pages.
*Note about Chase Bank
I particularly despise Chase Bank. If you have any credit cards owned by that bank or transferred ownership to that bank, I'd advise you get rid of them, since this bank has some of the worst customer service and the greediest policies I've seen.
I once had an Amazon.com card through Chase bank. This was the only bank where I could not improve my rates/limit because they played the "I don't have the power to do anything over the phone" card. Trying to improve anything with them was a waste of time. And one day, they were reviewing my account, saw that my credit score was dropping, and changed my interest rate from something like 9% to 29% because they felt like it. And they didn't see fit to tell me about it. I was never late on a payment to them, never had any problems fulfilling my end of the account whatsoever, always paid more than my minimum, and they tripled my interest rate because it was 'policy'. Needless to say, arguing with customer service went nowhere, so I transferred the balance to another card and closed the account. For the next two months, I was still seeing bogus charges (delayed interest for this and that) show up on that Chase account.
Now, with all the banks coming and going and being bailed out, my favorite credit card company (Providian-WAMU), with whom I have my primary (and highest balance) card, was just bought out by Chase. So they own me again. God help me when they 'do as they please' with my interest rates on this card.
