Ask and you may receive, get a reduction on all your bills NOW
Ask and You May Receive
It may only take one phone call and a few minutes of your time to save hundreds, if not thousands of dollars during the life of your debt balance. Credit card lenders, banks and energy companies for example are often willing to reduce your rate if you simply ask. While it won’t always work; it doesn’t hurt to try. So let’s use your credit card for the template to success for making these calls – read on (and send me a thank you comment below when you save hundreds of dollars by doing so today!)
As demonstrated here with ACA tonight: http://aca.ninemsn.com.au/money/8374913/how-to-negotiate-a-better-deal and featured in the Herald Sun http://www.heraldsun.com.au/news/more-news/home-loan-customers-securing-cheaper-mortgages/story-fn7x8me2-1226204104144
Factors That Will Improve Your Chances
- You have not recently requested a change in interest rates for that particular card.
- Your account is in good standing with a history of regular on-time payments.
- You pay more than the minimum each month.
- You have a good credit score.
- This tactic works best if you have a substantial amount of debt sitting on credit cards and have largely been able to make your payments up to this point. A few late payments are quite all right, but if you’re being chased by collection agencies, negotiating with the credit card companies won’t really help.
- If you’re not carrying a balance on your card or don’t carry a balance regularly, the credit card company is not going to be particularly interested in helping you out because as a customer, you’re not putting much money into their coffers. Simply put, this tactic works best if you have some leverage – you’re currently paying finance charges on your card and you’re threatening to move it to another account.
- Another important factor is your current interest rate. If your rate is already around 7.99% or so, there’s not much the credit card company can do to lower the rate. This tactic works best if you have a rate above 13% or so.
- Remember, though, any interest rate reduction will help if you’re carrying a balance. A 1% reduction on a card where you’re carrying a $1,000 balance will save you $10 a year. If your balance is higher, you save more. If your interest rate reduction is higher, you save more. For example, if you have a $5,000 balance and get a 5% rate reduction, you’re saving $250 a year from a single phone call – well worth your while.
- Preparing for the Call
while you might be tempted to just flip over your credit card and call the card issuer’s number on the back, you’ll have a much greater chance at success if you prepare just a bit in advance. - First, have a copy of your most recent statement with you. Make sure you know what your current interest rate is and also have your account number handy and easy to read. The statement should also provide you with the phone number you need to call.
- Next, collect any other offers you might have available to you. See if you have any zero interest or low interest balance transfer offers available to you – in other words, check your recent “junk mail” and/or log on to your online access for your credit card and see what’s available. Get a quote on a personal loan from your local credit union’s website. These will be used as leverage to get your rate reduced.
- You should also figure out a target rate to shoot for on the phone. I recommend shooting for 9.9%, but you’ll likely not get a rate that low.
- Finally, get in the right mindset. Drink a glass of water. Get yourself calm (because getting worked up on the phone won’t help you), yet motivated to make this work. Then pick up the phone and dial.
- Making the Call
The first thing you need to do is get someone on the phone that actually has the authority to change your interest rate. Likely, the first customer service representative that you speak to won’t be able to do that. - So, start off by navigating through their menu until you can speak to a representative. As soon as you can, ask the big question: “Do you have the authority to change my interest rate?” If the answer is no, simply ask, “May I speak to someone who can? Your supervisor, perhaps? Thank you!”
- Once you’ve got a person on the phone who has the authority to change your rates, make your case as clearly and succinctly as possible. Here’s a potential script:
- “Hello. Lately, I’ve been really having to stretch my finances to make the monthly payments on this credit card, and I need to reduce the interest rate somehow. It would be convenient to keep the balance on this card, but I have some other options that could really save me some money – a zero interest balance transfer offer is sitting right here, for one. Could you reduce the interest rate on my account to, say, 9.9%?”
- This puts the ball firmly in their court – and at that point, it’s largely out of your hands. The typical response is a reduction in rate, but not a reduction all the way down to the rate you requested.
- Regardless of what you get out of the call, be polite. Say “thank you” for any rate reduction and don’t get enraged if you don’t immediately get a big reduction.
- Other Options
Sometimes, you’ll get a rate reduction that makes you happy. At other times, you may not get much of a rate reduction at all – and in that case, you’ll want to do something else. Here are some options. - Seek out balance transfer offers. Moving your balance to another card can help get the finance charge monkey off your back – a useful short term solution.
- Seek out another type of debt. Investigate getting a personal loan at your local credit union. A home equity loan is a possibility, but it’s generally a poor idea to change unsecured debt (like your credit card) to secured debt (like a home equity loan).
- Lower the offending debt rapidly. Focus all your energies on getting rid of that high interest debt as fast as you can. You might want to work a second job, sell some stuff, or start a side business to generate extra money – and learning how to live cheaper is always a big plus.
- For most people with credit card debt, the possibility of success (and the savings that go along with it) with attempting to get your rate reduced is worth the effort involved in picking up the phone and doing it. Good luck!
The only Tips you’ll need for the negotiating.
1. Go first. Many people hate to be first to toss out a figure because they think they might miss out on an opportunity. (”If I offer $10k and he would have been happy with $5k I’ll spend a lot more than I have to.”) Occasionally that might happen, but it makes more sense to go into a negotiation assuming the other party is smart and has a reasonable sense of the value of whatever they want to buy or sell. Making the first offer lets you set the “anchor” for negotiations to follow. Studies show that when a seller makes the first offer the final price is typically higher than if the buyer made the first offer. Why? The buyer’s first offer will always be low, which sets a lower anchor. In negotiations, anchors matter.
2. Be quiet. When we’re nervous we tend to talk a lot and therefore miss a lot. Let silence be your friend. If you make an offer and the seller says, “No way,” don’t respond immediately. To fill the silence the seller will give reasons why your offer is too low… and in the process may give you information you wouldn’t have received otherwise. Stay relatively quiet, listen, and when you do speak, ask open-ended questions. You can’t meet in the middle (or, hopefully well to your side of the middle) unless you know what the other party really needs. Give them time to tell you.
3. Know what you want. You should always know what you need — and what you’re willing to spend or pay. If you don’t have a clue about the cost of a particular service, don’t expect the other party to educate you; that puts even the most ethical person in an awkward position. At the least have a sense of the market price for the product or service you want to purchase. Then you can adjust your offer based on the quality and quantity you will actually receive.
4. Assume the best case. High expectations typically lead to high outcomes. Ask for what you want, and go into the negotiation assuming you’ll get it. Why not? You can’t receive if you don’t ask. My wife is the eternal negotiation optimist; she always assumes she can make a deal on her terms. And she almost always does — because she confidently asks for what she wants.
5. Avoid setting ranges. Service buyers often ask for estimates in ranges: “I know you don’t have all the information you need, but based on what I’ve told you, what’s a ballpark figure?” Ranges create anchors too. If you don’t have enough information to provide a solid estimate, don’t. And never say, “Well, somewhere between $10k and $20k…” because the buyer will naturally want the final cost to be as close to $10k as possible, even if what you’re asked to provide should cost well over $20k.
6. Only make concessions for a reason. Say a buyer asks you to cut your price, saying, “All I can afford is $500.” Make sure you get something in return. Say, “For $500 I can do X and Y,” and take Z off the table. Every concession should involve a trade-off of some kind; otherwise your price was simply too high to begin with. Use the same logic if you’re buying; the classic home negotiation move is to ask for, say, all the appliances and fixtures when you counter at a higher number. Always ask for something in return, and don’t be afraid to ask for things you don’t really want early on so you have items you’ll be happy to take back off the table later.
7. Never be Harry Truman. Truman kept a sign that said “The buck stops here” on his desk to remind him that his was usually the final decision. In negotiations it’s tempting to say you have the final word and ultimate authority (especially if that’s true.) Don’t. To avoid getting cornered or pressured, always have a reason to step away and get the okay from another person, even if that other person is you.
8. Make time your friend. Never, ever rush. Never see a negotiation as something to wrap up as soon as possible. A negotiation is an investment in time, and most people don’t want to lose their investments, so the more time the other person has in a deal the more they’ll want to close the deal — and the more they will voluntarily give up in order to get you to say yes.
9. Ignore face value. Negotiating is a little like being on Survivor in the spirit of the “game,” many people feel it’s okay to be less than forthcoming or honest. Don’t assume everything you hear is true. Statements like, “I can’t go a penny lower,” are more likely to be negotiating tactics than truths. Listen, but toss a few grains of salt onto what you hear. Look closely for what lies under the posturing and positioning.
10. Give the other person room. People get defensive or attack when they feel trapped, and neither helps a negotiation move forward. Push too hard and take away every option and the other party may have no choice but to walk away. You don’t want that, because you should…
11. Forget about winning and losing. Negotiating can feel like a game but it’s not. No one should win or lose. The best negotiations leave both parties feeling they received something of value. That’s how you want a negotiation to end up, because a negotiation should…
12. Create a relationship. Take, but don’t take too much. Give. but don’t give too much. Establishing a long-term business relationship should always be your goal.
And when you’ve finalized the deal, say thanks — and mean it
If They Say No
Don’t worry if they say no to a rate reduction at first. If they are not willing to reduce it, you can inform them that you will be doing a balance transfer to another card with a lower rate. They want your business, so if you mention that you could be moving the money you may have more success.
Let me know how you go!
By Ryan O’Connor – Founder – Saving Money Expert
Related posts:
