Have you ever wondered why when you call the credit card companies that you can not get them to lower your interest rate? Why do financial experts make it look so easy to get lower credit card rates while you are just hearing “no”? It may be all in your approach. A few things to think about in deciding how to approach your credit card companies to get your rates lowered are:
Probably the biggest factor in getting your rates lowered is how determined do you sound. Most advice focuses on making sure that you do not take “no” for an answer and get to the supervisor who has more authority to lower your rate. However, determination is more than just not taking “no” for an answer. If you have children, you know that if you tell a child “no” in a wimpy voice that you are not going to get them to listen to you. The same is true for credit card companies who hear a wimpy “please lower my rate”. Alternatively, some people get angry and bite the head of the person they are talking to think that will get them what they want. However, this may just lead the other person to hang up on you.
Determination is about using a voice where the other person knows that you are not going to take a “no” for an answer. It is a clear, concise and powerful voice that demands respect. One thing that I find interesting is that most people would put calling credit card companies at the top of the list of things to do when it comes to debt reduction. Yet, if you feel overwhelmed by debt and do not have a plan to get out of debt (other than winning the lottery), how empowered do you think you are going to be? You may come off as sounding desperate. If you were a single woman, how would you respond to a guy that sounds desperate for a date (if pity was not involved)? Click.
You usually will feel more empowered when you see that you have a plan to get out of debt even if the credit card companies do not lower their rates (having lower rates will just make it easier). Thus, set up a plan of action first. Look for areas in your budget that you can cut back on so that you can repay the debt. Then when you see that you can repay your debt, call the credit card company from an empowered position. They have been charging you a high rate for months if not years, what is another week or two if it means being better prepared to get a lower rate? Just do not put if off to long. Get a plan in place.
Other ways to be more determined:
• Make the call when you are fresh and relaxed (not late at night when you are tired and frustrated).
• Sit up or better yet stand up when you are talking to them, otherwise your voice will come off as being more like “hey dude” if you are slouched in a couch watching TV while on hold.
• Be ready to be put on hold; do not let this annoy and frustrate who where you will give up before they do.
• Breathe – and even meditate – a good exercise is to focus on where your feet touch the ground and to imagine drawing the strength of the earth when you take a deep breath in (just focusing on taking a deep breath makes you feel more powerful and grounded in your task).
• No distractions – make sure that you are not going to have your younger child tugging on you to get your attention.
Love instead of Anger
Put yourself in the shoes of the person on the other end of the telephone. If you have had 3 straight hours of callers getting angry at you, how do you think you will respond to anger? Will you be willing to do the person any favors by lowering their rates? I do not think so. We sometimes can get what we want by getting angry. Yet, it is usually with people who do not want to deal with it and give in easily. Credit card representatives are not these people. They have heard it all the time and have developed a tough exterior that rebuffs efforts when someone calls them every name in the book to try to get their way.
Using a little bit of sugar can help (see True Story on Prosperity). Most people will get upset at credit card companies after hearing “no”. Thus, be different. And, being nice does not mean that you need to give up being determined. For example, I just had a repairman install a new hot water heater. After he removed the old one, he discovered the new one was bigger and he needed to rework the pipes to make it fit (another $300 in cost over the estimate). I responded very emphatically that $300 was not acceptable and this was something he should have measured and anticipated. I asked what he wanted me to do now, ask him to put the old heater back in? Needless to say, he did not charge me the $300.
There are several scripts floating around of what you should say when trying to lower your rate. The basic script is a good place to start. However, I wonder what the people on the other end are thinking when they heard the same script 40 times a day. It must be like listening to Ben Stein in Ferris Bueller’s Day Off doing attendencel (“Bueller … Bueller”). They may even start a game guessing what is the next line you are going to use to try to get them to lower your rate as a way to stay awake during your spiel.
The issue with this is if you are using a script to lower your rate, you may be coming off as someone doing a checklist of steps to take to get out of debt, but not really determined to go beyond what the script says if they tell you no a few times. It is like a New Year’s resolution where someone wants to lose weight yet is not really into it, so they may just need to wait you out before you quit your debt plan and stop calling them. So understand what the script wants you to do, yet you may want to go off script so that the person you are talking to isn’t doodling waiting for you to end the script for them to say “no”.
Giving up too soon
The credit card company representatives are paid to say “no”, especially when 1,000s of people are calling them a day because a personal financial advisor just reminded all their readers to make this call. It may take you ½ hour or 1 hour, yet remember that a 5% drop in your interest rate on $10,000 debt will equate to approximately $500 saved in interest for the first year alone. How much time are you willing to put in to get this savings? Now, if you had your own company, how long will it take for someone to convince you to drop your price by $500 if they do not have any leverage to go down the street to get a better deal (especially if every one is reading the same script)? You set you price for a reason, you are not going to discount it to the lowest rate possible, after a one minute script is read.
Responsibility instead of blame
If you talk with someone who works on collecting delinquent payments, you will find that they hear the blame game all the time. People blame them for everything even for the high property taxes that the person is delinquent on. If someone is pointing the finger at you with blame, what would your reaction be (especially if you are the person who has no control over the situation, just the one answering phones)? You are probably thinking of one of two things (i) get out of my face or (ii) how can I convince him that we are right. So instead of getting someone to work with you, they are finding ways to get rid of you.
Just taking responsibility by saying you know that you got yourself into this situation and have created a plan to get out of debt, goes a long way. It is showing them that you have switched from a potential delinquent payment to someone who will follow a plan. Again it is something that they may not listen to, yet it is worth a shot to be a little different.
Potential to leave them
As with anything, the more leverage you have, the better. Even if you do not fill out the application form to get a lower rate until later, just saying that you have an offer from _____ for _____, gets them to believe that you have done your homework and will follow through with your threat to leave. However, if you have a bad FICO score (which they know what your score is), you will have a harder time getting a lower rate and thus may get a response of go try. There is a point where a bad FICO score is not worth the risk to a credit card company and they would rather you transfer the balance to someone else before you stop paying on it all together because if you can not make the payments they will sell the debt to someone else at a fraction of the cost.
If you get a no, then find out what your options are (fill out the forms). If you get a good offer, call your company back saying they have one last chance to beat this rate before you switch. What do you have to lose at that point other than getting a lower rate and not paying a possible transfer fee?
Is there something you can do to convince them you are determined to follow a plan?
If you got a “no” after “no” and are about ready to quit trying, ask them why they are giving you a no. If it is because you had even 1 late payment in 12 months, see what they are willing to do if you can prove you are back on track on being responsible. Ask them what if you have 6 or 12 straight on time payments? What if you pay more than the minimum? Would they lower the rate then? If so, get it in writing. They may not do this, yet it is worth a shot. Again, someone with a plan is in better position than someone who is just reading off a script hoping that something will work out.
Have a friend or financial planner call for you
Financial planners seem to have a better success rate (or at least brag that their script works) maybe because they know what to say, maybe because they are not scared because it is not their situation, maybe because credit card companies know they will take you to the next step of finding a better offer (e.g., shows that you are determined to get out of debt by having an advisor). Whatever it is, it is worth a shot, especially if you have not gotten anywhere on your own. You may not need to hire an advisor to get the same results. A friend can say “I am working on behalf of _____”. The more they appear to be working for you, the better.
The key is if you have gotten a “no” before, then try something different. There are thousands of phone representatives and you do not know what it will take to get the one you are calling to agree to lower your rate. So be creative and trying different things until something works. And remember, once you have gotten a lower rate or have a 0% offer, see if it comes with conditions that new payments will be charged a higher rate while any new payments on the card will go to pay off old debt first. Thus, it may make sense to have two cards, one for the old debt at the lower interest rate and a new card that you pay diligently off every month otherwise be hit with higher interest rates on your new debt.