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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 2571
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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I had a couple of very unanticipated expenses that were

Customer Question

I had a couple of very unanticipated expenses that were large enough they needed to be put on a couple of credit cards. The interest rates were fairly low when the charges were applied, and I started trying to pay the cards off. I have never missed a payment, and am no late on my payments. However, the credit card companies increased the interest rates through the roof (20 - 25%). As a result, although I'm paying and paying and paying and paying trying to get rid of the debt, I never get very far on the principle because approximately half of each payment goes towards interest. I called the credit card companies to see if there was anything I could do to get the interest rate lowered. I have had one card for 25 years. The other card I have had for 30 years. In each case, I was told that they couldn't do much to lower my rates since I had a fairly large amount. I was able to get the interest rates down about 1.5%, but nothing more than that. I want to pay these cards off and get out of debt, but am unable to do that with such high interest rates. Is there anything I can do or say to get the credit card companies to lower my rates?
Submitted: 10 months ago.
Category: Finance
Expert:  Gabriela Brondo replied 10 months ago.

Good evening,

You are pretty much at the discretion of the credit card company but this doesn't mean its the end of your options. I would do the following if I were you:

  1. Find out your credit score and know your credit- Check out this website (https://www.annualcreditreport.com/index.action). This is the only source for your free credit reports from all three of the credit agencies. I believe you can pay an additional fee to get your score.
  2. Once you know your score and how good your credit is-Do an online search of your credit cards (using each card's exact name) and compare the interest rate you are currently paying to the rate each of your card companies is offering to new customers.This is the type of information you want to know before you get on the phone to ask your credit card company for a lower rate.
  3. Compare your Rate to National Averages.- You can get the latest credit card rates, along with national averages, at websites like bankrate.com.
  4. Figure Out the Rate You Should be Paying Based on Your Credit Score-Before you start calling your credit card companies, determine what category your credit score should qualify you for. If you have a "super prime" credit score, your credit card company shouldn't be charging you the regular "prime" rate. If it is, ask it why when you call the company. Remember, unless you make the effort to get your interest rates down by asking for a better deal, your rates are going to stay high, and it's going to be harder for you to get out of debt.

  5. Call Your Credit Card Company-When you call the credit card company, your job is to USE YOUR KNOWLEDGE. You have become smarter about your debt and know what kind of rates are being offered, so there's no reason for you to be afraid to ask for a better deal. However, assume that the first person you speak to is going to say, "Sorry, I can't help you." This is what the first tier of customer-service representatives are generally trained to say. If this happens, simply respond by saying, "Well, then let me speak to someone who can help me. Please connect me with your supervisor." When you make this request, the customer-service rep may say, "I'm sorry -- no one is available right now." Don't accept this. Instead, tell them you want their name and ID number, so you have a record of whom you spoke with. Then insist they put a supervisor on the line immediately. I have never been unable to get a supervisor on the phone. Once you've got him or her on the line, explain your situation. Start by going over your current rate, tell them your credit score, and ask why your rate is higher than it should be. Compare your rate to what competitors are offering and ask if they would be willing to work with you to give you a better deal.

  6. Ask About Forbearance or Debt Management Plans.-When all else fails, there is one last resort that can ultimately get your rates lowered. The credit card companies know that millions of their customers are in financial distress. It may be because you lost a job, had an illness in your family, or are simply earning less than you used to earn (what they call being "underemployed"). What the credit card companies will often do in such cases is review your situation, and based on what they find, they may decide to work with you to restructure your debt. This restructuring can include lowering your interest rates to zero for a period of time (usually six months to a year), lowering your minimum payments, suspending over-the-limit penalties or annual fees -- or all of the above. There are two basic types of hardship plans for people with credit card problems: Forbearance Plans and Debt Management Plans (or DMPs). One downside of enrolling in these programs is that your credit card company may report this to the credit bureaus -- and if it does, this could lower your credit score. But not all the card companies do this. To find out whether yours does or not, make sure you read the fine print before you sign the contract. The truth is that even if enrolling in a forbearance program affects your credit score in the short term, it's better than falling behind on your payments or not being able to reduce your debt because you're paying so much in interest.

  7. Last alternative, consider obtaining a Home Equity Line of Credit (HELOC) or a Home Equity to pay off your credit at a lower rate (http://www.bankrate.com/calculators/home-equity/home-equity-or-line-of-credit-calculator.aspx) ​​

Expert:  Gabriela Brondo replied 10 months ago.

Hope this has helped … let me know if you have questions
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If this HAS helped, (and you don’t have additional questions on this), I'd really appreciate your positive rating … (by using the stars or rating request on your screen) … … That’s the only way I'll be credited a portion of what you've paid JustAnswer.
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Thank you,
Gabriela L. Worrell, CPA

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