Negotiate your debt APR
I’m a big fan of taking fifty-fifty odds if the upside is big and only takes five minutes of my time. Consequently, try to negotiate your April. Does it work unexpectedly often, and if not, then what? Just call your card companies and follow this script:
YOU: Hello. I will be paying off my credit card debt more aggressively starting next week and would like a lower APR.
CREDIT CARD TOP-UP: Well, why?
YOU: I have decided to be more aggressive about paying off my debt and so I would like a lower APR. Other cards offer me rates half of what you offer. Can you reduce my rate by 50 percent or just 40 percent?
CREDIT CARD TOP-UP: Hmmm. . . After reviewing your account, I’m afraid we can’t offer you a lower APR. However, we can offer you a credit limit increase.
YOU: No, that won’t work for me. As I mentioned, other credit cards offer me zero percent introductory fees for twelve months, as well as annual annual rates of half of what you offer.
I have been a customer for X years and would rather not switch my balance to a low interest card. Can you match the other credit card charges or can you reduce them?
CREDIT CARD TOP-UP: I see . . . Um, let me draw something here. Fortunately, the system suddenly lets me offer you a reduced APR. This is immediately effective.
It doesn’t work every time, but when it does, you can save a significant amount of money with a five-minute conversation. Make the call and if you’re successful, don’t forget to recalculate the figures in your debt spreadsheet.
I literally called my credit card company at the airport bookstore BEFORE I bought the book, read the script, and was able to negotiate a better APR. And they even credited the last years interest back to my account (only a few hundred dollars, but STILL). I bought the book seconds after it closed.
– CHRIS COLETTI, 33
That first week I practiced my script, then I applied for my credit cards and my rate dropped from 18 percent to 11 percent.
?CHARLOTTE S., 35
The debt was awful. It felt like a cloud over me at all times. I started contributing $100 more than the minimum and I screwed this shit up. I still have the “paid in full” notices saved.
-MATT GROVES, 31
Decide how to pay off your debt
A common obstacle to paying off debt is wondering where the money is supposed to come from. Balance transfers? Should you use your 401(k) money or your savings account? How much should you pay each month? These questions can be scary, but don’t let them stop you.
Balance Transfers
Many people start by considering a balance transfer to a card with a lower APR. I’m not a fan of those. Yes, it can help you for a few months and save you money, especially on large balances.
But that’s just an aid to a bigger problem (usually your spending behavior when it comes to credit card debt), so changing the interest rate isn’t going to address it.
Plus, balance transfers are a confusing process filled with tricks from credit card companies to trick you into paying more, and the people I know who do this end up spending more time researching the best balance transfers than paying off their debt .
As we just discussed, a better option is to call and negotiate the APR on your current accounts.
