High-interest credit card debt is one of the most common types of balances consumers carry. It’s also one of the most expensive and financially damaging, because heavy interest charges make it more difficult for cash-strapped individuals to eliminate their balances, even when they are doing everything right.
Consumers who are following a strict budget and paying more than the minimum payment, but still find themselves unable to make a dent in their credit card balances, have other options. One of the lesser-known actions borrowers should consider is contacting their card issuer and negotiating their credit card rate.
The credit card industry is a competitive market and more lenders are open to extending better terms and conditions in order to retain customers. Many lenders are more willing to help consumers chip away at their debt than they may initially seem, but few adults are aware that they have the right to negotiate their rate. As a result, they don’t ask for better terms and end up paying more than they should on their balances.
Instead, adults should have a candid discussion with their lender and ask for a rate reduction. Keep in mind that they may not receive a double-digit rate decrease, but even lowering the rate by a few percentage points can make a considerable difference, U.S. News and World Report explains. Consumers can then use the money they have saved on interest charges – even if it’s a modest amount – and make additional payments on their balance.
It’s also important to realize that not all lenders will agree to lower an adult’s interest rate and the borrower’s payment history and credit standing may be factors in their decision. For this reason alone, it’s important to be persistent and speak with a number of representatives before exploring other options.
However, individuals should not give up on bettering their finances if their request is denied. Instead, consider transferring a balance to a credit card with more favorable terms or enrolling in a credit counseling service to take advantage of consolidation or debt management services. The key to eliminating credit card debt is to take a proactive approach to making changes in spending and working with professionals.