How To Negotiate Interest Rates With Creditors

How To Negotiate Interest Rates With Creditors

The interest rate on a card is so much more than meet the eye.  Along with determining the dollar amount of interest you pay each month, it also plays in to determining your minimum monthly payment and how long it will take to pay off your debt.  Because of this, negotiating for a lower interest rate is crucial.  A drop of even 2-3% can make a huge difference in the lifetime amount you pay in interest.  The following are tips for successful negotiation.

Tips To Negotiate Interest Rates with Creditors

1.) Learn your stats.  By law, you are entitled to one free credit report from each of the three credit bureaus each year.  Scour the report for errors and make sure that the information is accurate and timely.

2.) Learn your FICO score.  For a small fee (often $6 to 12), you can access your FICO score, which is often the largest component of how your interest rate is determined.  Once you have that information, you are armed to call your creditor.

3.) If your FICO score is 700 or greater, you have the most negotiating power.  Even if these tough economic times, you have leverage because of your good credit score.

4.) Even if your FICO score is not as high as you would like, consider your history with that particular creditor.  If you’ve made on-time payments for the past 6 months or more, say so.  If you’ve been a customer for several years, bring that up too.  Do everything you can to cast yourself in the most positive light.

5.) Even if you have had negative encounters with the creditor, bring up your recent history.  If you’ve made on-time payments for the past 3 months after a rough patch, bring that up.  Remember, you aren’t trying to get a 0% interest rate – even a reduction of 2-3% is a huge step in the right direction.

Consumer Credit Counseling Agencies

If all of these steps fail and you are in a difficult financial situation, you may need the help of professionals.  A consumer credit counseling agency can be your advocate and will likely have more negotiating power to lower your interest rates.

Related posts:

1. What Kind Of Interest Rates Do Debt Management Companies Negotiate?
2. What To Do If Your Creditors Will Not Negotiate?
3. How To Negotiate Debt With The Creditors?
4. Is It Better To Negotiate With Creditors Yourself?
5. Do All Debt Management Programs Offer The Same Interest Rates?