Do you ever have the feeling your credit card balance isn’t going down? And you’re paying as much as you can each month. There’s a simple reason why this can happen. Much of your payment is going toward interest that it’s not making a difference with your balance. Penalty charges, like an increased interest rate or late fees, make it harder to actually reduce your credit card balance.
What can you do to fix the situation so you can pay the same amount each month and actually make progress toward paying off your debt?
How to Make Sure Your Credit Card Balance Goes Down
You can ask your credit card issuer for a lower interest rate. You see, the amount of interest you pay each month is directly impacted by your interest rate. The higher your interest rate, the more of your monthly payment that goes toward interest. Asking your credit card issuer to lower your rate would allow you to pay off your debt faster even if you’re making the same monthly payment.
Related: Understanding Interest Rates and APR for Credit Cards
The First Step to Negotiating Is to Make the Call
Your credit card issuer may be more willing to work with you than you realize. They want to get repaid just as much as you want to pay them off. There’s a pretty simple way to working out a solution with your credit card issuer: just ask. Communicating with your creditor is the most important thing to do when you’re having financial troubles. They can review your account and let you know what options are available to assist you.
Creditors want to prevent you from defaulting on your account. Think about it. If you default on your payments, your creditor doesn’t get paid at all. Creditors know that customers who default on their accounts are more at risk of filing for bankruptcy. To prevent this from happening, they’ll extend hardship programs or other repayment options to customers who are having trouble making their payments.
Make a Plan For a Successful Negotiation
Before you call your credit card issuer to negotiate a lower rate, do some research and come up with a plan. Outline what you’re going to ask for and what you’re going to say once you get your credit card issuer on the phone. You can simply state that you’re having trouble making payments, but that you’re dedicated to repaying the balance. Ask if the credit card issuer can lower your interest rate to help you take care of the balance.
Keep your expectations realistic. You may not be able to qualify for a 0% interest rate promotion, especially if you don’t have the best credit history. For example, if you have a history of late payments on that account or you have other late payments on your credit report, your credit card issuer may decline your request for a 0% interest rate. You could even be denied with an excellent interest rate, if your credit card issuer doesn’t typically offer low promotional rates for that credit card.
Still, if you can get a rate a few percentages lower than your current one, your monthly interest charges will decrease and your balance will go down much more than with your higher interest rate.
The Best Time to Request a Lower Interest Rate
It’s best to request the lower rate as soon as you notice you’re having trouble. If you wait until you’ve missed payments, it may be too late to qualify for a lower interest rate. Once you’ve successfully negotiated a lower interest rate, take note of the rate your credit card issuer agreed to. Watch for the interest rate to take effect on your next billing statement.
Related: The Best Credit Cards for Bad Credit
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