9/21/2012 1:02 PM ET|
5 things card issuers won't budge on
If you need a break, it's OK to ask for concessions. But before you do, be aware of the risks of an inquiry -- and know which requests are routinely denied.
You've gotten yourself into some financial trouble -- overspending when work is slow or nonexistent. You are hoping to negotiate with your credit card issuer to give you some wiggle room with those monthly payments.
Go for it, says Mike Sullivan, the director of education for Take Charge America, a nonprofit credit counseling organization in Phoenix. "I can't think of any credit card terms that can never be negotiated," he says.
However, Sullivan and other credit experts warn: Be careful about what you ask of your credit card company and when you do it.
You could end up damaging your credit scores and lowering your credit limit just by making inquiries, says Beverly Harzog, a credit expert and consumer advocate in Atlanta and co-author of "The Complete Idiot's Guide to Person-to-Person Lending."
Here are some requests you're least likely to have granted and may wish to avoid:
1. Would you extend my promo offer?
You took advantage of a 0% balance transfer offer and moved a $10,000 balance from a credit card with a high interest rate to one that had a zero rate.You had a full 18 months of 0% interest, but somehow you didn't manage to pay off the balance. Now you're facing an interest rate of 21.99%. Phew. You can ask the card issuer to extend the 0% for a few more months, but the answer is likely no.
One of the reasons credit card companies offer 0% transfer balance cards is to reel you in. They really don't expect you to pay off the balance during the promotional period, whether it's six months or 18. They're hoping you don't, because they make money from the interest you pay on the balance due. So they're not likely to extend the 0% interest rate beyond the original terms, Harzog says.
Rather than pay the higher interest rate, you can always look for another 0% balance transfer offer, Sullivan says. But you can do that only if your credit is good and if the math makes sense, because you'll likely have to pay a fee again. Most cards charge a 3% to 5% fee when you make a balance transfer.
2. Could you drop the late fee?
If you forget to make at least the minimum payment by the due date once, you likely can negotiate with your credit card issuer to drop the $35 late fee. Be late a second time -- especially within the year -- and you aren't likely to win this negotiation.
"If you've been repeatedly late, you won't be in a good position to negotiate," Sullivan says. If you're repeatedly late and pay only the minimum due month after month, you might not even want to go there with your credit card issuer, Sullivan says. "If you're a marginal client, you don't want to shake that tree, because they're just as happy to get rid of you." You could end up with no card versus one you're paying more for than you have to, thanks to your own financial sloppiness. And if you have bad credit, good luck trying to find a replacement card.
You shouldn't be late anyway, Harzog says. Set reminders on your phone or have the credit card company automatically email you reminders of when payments are due.
3. Wait! I have to pay for convenience checks?
Most people receive at least two or three checks in the mail from their credit card issuer every month. The solicitations encourage you use the checks to make that dreamy home improvement, or go on a well-deserved vacation, or to transfer the balance you owe another credit card company to it. The credit card company makes it look so easy and affordable. But hidden in the fine print: a 3% transaction fee for using the check and an interest rate that may sound wonderful but lasts only a few months. Don't use the checks and then expect to negotiate the fees and interest rates with your credit card company, Harzog says. They likely will tell you the terms were spelled out when you received the checks and you have to live up to your end of the deal.
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4. Could I have a higher credit limit?
You probably can negotiate a higher credit limit with your credit card issuer if you have good credit and you pay your bills each month on time, Harzog says. But the answer is likely no if you need a higher credit limit because you lost your job or you're going to be out of work for a while because of a medical emergency. Don't call the credit card company to negotiate a higher credit limit if your financial circumstances have changed and you're a greater risk to default, Harzog advises. Knowing you're a greater credit risk, your credit card issuer is not only likely to say no, but it also could cut your credit limit because it fears you won't be able to pay. You could alarm your credit card issuer, and it could end up canceling your account.
5. Can the 'annual fee' be dropped?
Most secured credit cards have an annual fee. The fee may not be that high -- typically it's about $29, Harzog says. "But if you have poor credit, it's very difficult to get rid of the fee that comes with your card. They're going to want that annual fee from you in case you don't pay it back."
A final caution: Consider your credit scores
Before you decide to negotiate with your credit card issuer, think about the consequences. If you're a good customer, "it never hurts to ask," Sullivan says.
But if your credit is shaky and your history of repayment poor, Harzog says, "your chances of successfully negotiating terms and fees are going to be far less."
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Dear card issuers:
Nice list. Here's mine.
5 things I won't budge on
1. No matter how crafty you advertise, I don't want your card and you probably don't want my business
2. I don't need an introductory interest rate
3. I don't need your points
4. I really have what I want already, and more importantly I want what I have. Stop the preapproved mailings.
5. I will pay my bill in full every month, so don't look for me to eventually pay you any interest or late fee. BTW your minimum payment is really an insult.
How do you stop the cards they keep sending?
I don't have any and don't want any. Cash only, please.
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