January 30,2009
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Rare Opportunity to Negotiate Lower Costs, Pt.4
– The tiered approach.Start at the top: Generally, the best place to start is the credit card APR. But don't think small, here. Take the debt list you created in the last article and discuss credit card interest rates. Explain how, by consolidating all these with a Balance Transfer, into a low low interest credit card account that you could easily make the remaining single minimum payment. They like minimum payments because they make money on the interest, even if it's low interest. Transfer fees can be substantial so keep a calculator on hand and negotiate the best combination for yourself. Three percent Transfer Fees are the current advertised standard. Maybe they can do better for you.
Plan B: If you can't settle on favorable terms, then work with your existing credit card account with the large balance and shoot for lower interest. (This is like only asking for one favor instead of two). If you're not getting anywhere with this either, choose a strategy:
1) Go for the low-hanging fruit like fee and penalty waivers, then call back another day;
2) Ask to speak with a manager or;
3) Threaten to choose their competitor and close your account with them (you don't really have to close it, just transfer your balance out).Come prepared: Your negotiating clout and leverage is directly related to preparation. If you know your FICO Score or are familiar with your credit report, that can help a great deal. Present points like Credit History, Payment History, Utilization Ratio (most lenders favor you owing 30% of your maximum allowable debt) or any other thing that makes you look good. They'll probably be very impressed that you care enough to even know about these things. Always be friendly, but professional.
Remember, your goal is to gain the most favorable credit card terms you can get. You may have to suggest reasons this benefits the agent your dealing with (even if it's a good review at the end of the call).