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5 Good Reasons to Call Your Credit Card Company

Written by:
Financial Literacy Specialist

Customer loyalty can be turned into cost-savings when the time is right.

A financial expert named Matt Schulz shared an interesting story with Business Insider. He explained how a call to cancel a credit card account turned into a cost-saving venture. He had a rewards credit card with a $95 annual fee. He didn’t use the card enough to justify that yearly cost. So, he called to cancel.

“Then she made me an offer: Keep the card, spend $1,000 in the next three months and get 7,000 bonus Starwood points. I wasn’t surprised that they made an offer. If you have decent credit, a credit card issuer isn’t likely to let you just walk away. The credit card marketplace is simply too competitive – and that’s where your power comes from.”

Schulz did the math. He knew from research that the points on that particular card were worth about 2.4 cents. That means the customer service representative was offering something with a cash value of $168. That would be worth the $95 annual fee. As a result, he decided to keep the card.

The moral of the story…

Call your credit card company regularly to negotiate rates and fees

“A credit card company wants your business. They want you to keep their account open and use the card actively. That use is how they generate revenue, so they don’t want to lose customers,” says Gary Herman, President of Consolidated Credit. “You can use this to your advantage to make sure you get the best deal on the cards you use.

Herman advises that you can get several benefits from talking to your creditors regularly. Although Schulz received extra rewards, that’s not usually something you call to ask for; he got it as an incentive not to close the account. However, there are three common things you can ask a credit card company to do that have a high chance

#1: Request that they waive your annual fee

Credit cards with annual fees cost more to use. The annual fee is essentially the cost of using that card each year. According to a 2019 credit card study, although 70% of credit cards don’t have an annual fee, for the cards that do, the average fee is $110.[1]

As Schulz points out in his article, a survey conducted in 2017 found that 82% of cardholders who asked their credit card company to waive the annual fee were successful. But most people simply don’t call to inquire. If you’re proactive and call them early before the fee applies, you may not need to pay it.

#2: Ask them to waive a late fee

In addition to annual fee waivers, the same 2017 study found that 90% of cardholders that asked for their credit card company to waive a late fee were successful. In 2019, the average late fee was $36. So, if the bill due date falls through the cracks and you miss it, call your creditor! There’s a good chance they’ll forgive a one-time mistake and waive the late fee.

#3: Ask for a higher credit limit

This one can be tricky because you always want to make sure that you don’t take on more debt than you can manage. However, there can be a good reason to increase your credit limit. Not only does it give you more purchasing power, but it can also help improve your credit score.

Credit utilization measures your current total balance versus your total available credit limit. It’s the second biggest factor used to calculate credit scores. The lower your ratio, the better; anything higher than 30% is bad for your credit score.

Let’s say you have a $1,000 limit on three credit cards. That means your total available credit limit is $3,000. If you owe $1,500 total on those three cards, your credit utilization ratio is 50%. That means you’re hurting your credit score. You could pay off debt to fix your ratio, but you could also increase your credit limit. If each creditor agreed to increase your limit by $500, your total limit would be $4,500. In this case, your ratio would be 33%, putting you much closer to a good ratio without any work.

“Just be careful when you ask for limit increases,” Herman cautions. “You can’t use more credit as a license to spend. That’s a good way to end up facing debt problems that you can’t solve on your own. But asking for limit increases and using them strategically can be beneficial when done correctly.”

#4: Negotiate a lower interest rate

This is our favorite technique that we recommend using regularly. You should call each of your creditors periodically to negotiate lower interest rates. This is especially true if:

  1. You’re a loyal customer who always pays on time
  2. Your credit score has improved since you opened the account
  3. You have not requested a lower rate within the past 12-24 months

“A lower interest rate means using that account is more cost-effective,” Herman explains. “If interest charges apply, you’ll pay less. So, the cost of using credit is reduced.”

#5: Get interest charges waived after consolidation

This last recommendation only applies if you pay off your balance through debt consolidation. If you use a balance transfer or consolidation loan, you pay off your balance in full. This means that you shouldn’t owe anything on the next billing cycle. However, credit card companies apply “periodic interest charges” based on your “average daily balance.”

Basically, this means that if you pay off your balance in full in the middle of the month, the creditor might apply interest charges in the next billing cycle. So, even though you have a zero balance, you could still owe a bill. But before you pay those extra charges, call your creditor to see if they’ll cancel the interest charges.

“It’s worth it to at least call,” Herman encourages. “You aren’t guaranteed to be successful in every venture, but there’s nothing lost in asking. You could save some money and it only takes a few minutes to do.”

Having trouble negotiating with your creditors on your own? Get a certified credit counseling team to work for you!

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