Week 1 - Credit Card Negotiations:
Tackling your credit card debt should be a top priority. It’s a challenging prospect, but also the most rewarding. Interest rates charged by large banks are outrageous, which makes it easy to get in a sinking hole of debt that seems impossible to dig out. However, if you can be successful managing this debt, you can save thousands of dollars. I saved over $10,000!
I, like most people, think about my debt constantly. It is a burden I have dealt with almost my entire adult life. Over the past couple of years, with some restraint and discipline, I have become less and less dependent on credit cards, trying to only purchase with debit or cash. However, after one year of minimal credit card purchases, I was shocked to see that my outstanding balance had barely moved. This was because I was making just over the minimum payment, which contained 50% (or more!) of interest. So, although it may have felt like I was making large enough payments to make a difference, it actually only reduced the principal balance by a fraction. At this rate, I was never going to get there! Unfortunately, that is the sad reality for many people with a large amount of credit card debt.
The good news is that there is a way out. This year I decided more dramatic action was required – taking on the big banks and negotiating a better rate! Negotiating with banks is not easy and requires research and a strategy. My strategy was simple and only required a few phone calls.
Step 1 – Sum It Up
Write down the balance of each card, along with the interest rate, available balance and minimum payment.
Step 2 - Research
Check the internet to see what promotional rates are being offered with your bank and competitors.
Step 3 - Negotiate
Call your existing credit card companies and request a lower rate; ask to speak to a manager.
When requesting a lower rate, make sure to have all of the pertinent information in front of you including the number of years you have had the account, your payment history (if no missed payments), your credit score, and the promotional rate options available.
Step 4 – Inquire
Call any cards with a low balance and ask about offers for balance transfers. Many cards offer 0% or low rates, for a limited time. Make sure to understand the limitations and fees associated with balance transfers.
Step 5 – Explore Your Options
Contact a local Credit Union(s) and inquire about a personal loan rates for credit card consolidation.
Step 6 – Compare
Using the options you have, compare them to what you are paying now. Make sure to take any charges (typically 3-4% for balance transfers) into consideration when factoring your savings.
Step 7 – Get Moving
Based on your comparison, move your money, close accounts and start paying off as much as possible!
For me, the best option included a combination of a personal loan from a local credit union and a balance transfer offer from one of my husband’s credit cards. Using this mehod, I am predicted to save $10,702 and pay off my debt 11 months earlier than I would have if I had done nothing.
Another tip to help reduce the interest you pay is to make more frequent payments to your credit card. Since interest accrues daily, if you don’t pay the entire balance it saves money to pay down the debt earlier. Using this philosophy, I started making payments twice a month. I took the monthly payment and paid half on the 1st of the month and the other half on the 15th. This put me on a regular schedule and saved interest on those 15 days. If you decide to do this, it’s key to make sure you are making at least the minimum payment and that both payments are made before the due date to avoid any late charges. If necessary, talk to your credit card company and change your due date. Mine are all due on the 15th of the month, which makes it easy for me to remember.
All data found on this website is Copyrighted by MOMTHATSAVES. Unauthorized reproduction is prohibited.
Tackling your credit card debt should be a top priority. It’s a challenging prospect, but also the most rewarding. Interest rates charged by large banks are outrageous, which makes it easy to get in a sinking hole of debt that seems impossible to dig out. However, if you can be successful managing this debt, you can save thousands of dollars. I saved over $10,000!
I, like most people, think about my debt constantly. It is a burden I have dealt with almost my entire adult life. Over the past couple of years, with some restraint and discipline, I have become less and less dependent on credit cards, trying to only purchase with debit or cash. However, after one year of minimal credit card purchases, I was shocked to see that my outstanding balance had barely moved. This was because I was making just over the minimum payment, which contained 50% (or more!) of interest. So, although it may have felt like I was making large enough payments to make a difference, it actually only reduced the principal balance by a fraction. At this rate, I was never going to get there! Unfortunately, that is the sad reality for many people with a large amount of credit card debt.
The good news is that there is a way out. This year I decided more dramatic action was required – taking on the big banks and negotiating a better rate! Negotiating with banks is not easy and requires research and a strategy. My strategy was simple and only required a few phone calls.
Step 1 – Sum It Up
Write down the balance of each card, along with the interest rate, available balance and minimum payment.
Step 2 - Research
Check the internet to see what promotional rates are being offered with your bank and competitors.
Step 3 - Negotiate
Call your existing credit card companies and request a lower rate; ask to speak to a manager.
When requesting a lower rate, make sure to have all of the pertinent information in front of you including the number of years you have had the account, your payment history (if no missed payments), your credit score, and the promotional rate options available.
Step 4 – Inquire
Call any cards with a low balance and ask about offers for balance transfers. Many cards offer 0% or low rates, for a limited time. Make sure to understand the limitations and fees associated with balance transfers.
Step 5 – Explore Your Options
Contact a local Credit Union(s) and inquire about a personal loan rates for credit card consolidation.
Step 6 – Compare
Using the options you have, compare them to what you are paying now. Make sure to take any charges (typically 3-4% for balance transfers) into consideration when factoring your savings.
Step 7 – Get Moving
Based on your comparison, move your money, close accounts and start paying off as much as possible!
For me, the best option included a combination of a personal loan from a local credit union and a balance transfer offer from one of my husband’s credit cards. Using this mehod, I am predicted to save $10,702 and pay off my debt 11 months earlier than I would have if I had done nothing.
Another tip to help reduce the interest you pay is to make more frequent payments to your credit card. Since interest accrues daily, if you don’t pay the entire balance it saves money to pay down the debt earlier. Using this philosophy, I started making payments twice a month. I took the monthly payment and paid half on the 1st of the month and the other half on the 15th. This put me on a regular schedule and saved interest on those 15 days. If you decide to do this, it’s key to make sure you are making at least the minimum payment and that both payments are made before the due date to avoid any late charges. If necessary, talk to your credit card company and change your due date. Mine are all due on the 15th of the month, which makes it easy for me to remember.
All data found on this website is Copyrighted by MOMTHATSAVES. Unauthorized reproduction is prohibited.