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Can't I Just Request Lower Interest Rates on My Own?
Many financial experts will tell you that when your interest
rates are high, that you can just call up your credit card
companies and request a lower rate. If you are in a position to
do so, they are absolutely correct. Poor financial situations
can hinder your ability to receive lower rates on your own.
If you have excellent credit and can pay well above what your
creditors are asking for minimum payments, then you are in a
good position to request lower interest rates with each creditor
directly. On the other hand, high debt balances, late payments
and a low credit score can keep you from getting any reduction
in your rates.
How to Request Lower Interest Rates on your Own
Ask yourself, can I do this?
- Pay at least $100 above the minimum payment for at least
3 consecutive months.
- Reduce my new charges on all credit cards so that the
balances are dropping.
- Increase or maintain my credit score above 675.
If you are able to do all of these things, then you are in an
excellent position to request a lower interest rate on each
credit card account. Remember to show your creditors that your
financial strength is improving.
Make substantial extra payments on your accounts for at least
3 consecutive months. Their "account review" credit inquiries
should show that your balances are decreasing. Call your
creditors and mention the pre-approved offers with better terms
that you have been receiving.
Give them an opportunity to lower your rate to earn your
continued business. Request a much lower score so that there is
more room for negotiation. Once your rate is lowered, repeat the
process and request a lower rate again after 3 more months.
Why Would Creditors Refuse my Request?
Creditors do commonly refuse requests for interest rate
reductions. Usually they cite late payments in the past, or high
debt balances as reasons for concern. They may cite late
payments on other accounts. You higher rates may be due to
universal default.
You may even have been labeled a "slow pay" due to your
inability to pay more than the minimum payments. Creditors do
not normally grant interest rate reductions due to your
financial distress. In fact, the opposite is true. Creditors
will require a higher rate to justify the increased risk of
extending credit to a cardholder that is experiencing financial
difficulties. What is worse is that the higher finance charges
result in higher minimum payments, which can make it even more
difficult to recover on your own. If you are behind in your
payments, then they consider you a default risk and will
normally apply the default rate of well over 20% APR to your
balances. This combined with the late payment penalties can keep
you from ever recovering.
Getting Lower Rates with Poor Credit
Cardholders that are suffocating under debt that they cannot
get ahead of should consider meeting with a credit counselor.
The Accredited Credit Counselors and Financial Counselors at
Personal Financial Network are experienced to help you evaluate
the seriousness of your financial situation and to provide
options for you to discover debt relief.
We can show you how our years of experience have benefited
thousands of debtors. When you are serious about getting out of
debt, most major creditors do offer lower interest rates when
you commit to a structured repayment plan. Their conditions
include:
- You should no longer use your credit cards (you may keep
one for personal/business use only).
- You should avoid opening new accounts.
- You should avoid missing payments in the future.
If you are serious about eliminating debt, you may be
eligible for interest rate reductions and lower payments through
a creditor-sponsored debt
management plan. In addition to lower interest rates, a debt
management plan can usually provide you with a somewhat lower
payment. This is so that you can better fit a monthly payment
into your budget and keep your payments consistent. Most
credit card companies participate in debt management plans
because they want to help you avoid default. If you file
bankruptcy, they may receive almost nothing. If they charge off
the account, then debt collectors may only pay a fraction of
what is owed.
Creditors
participate in a debt management plan in order to help you
avoid default. In turn, they are willing to help you with lower
payments and lower interest so that you can get ahead. If you
would like to see if you are eligible for lower interest rates
and lower payments through a debt management plan,
contact an Accredited Financial
Counselor at Personal Financial Network today. You may be able
to get the help you need if you act before it is too late. |
