Credit card companies are keen for your business. So keen, in fact, that they’re willing to spend millions of dollars mailing out two and a half billion pieces of direct mail to American homes in 2010 alone, according to our recent interview with Synovate’s Anuj Shahani. That doesn’t include the millions more they spend on TV ads, their websites, and all the personnel needed to process all those applications.
Needless to say, after spending all that money to win your business, credit card companies are highly motivated to keep it. And they know that their competitors are constantly trying to steal away their customers with better deals.
That means you, the cardholder, have more power than you realize.
It’s easy to think that as individuals we have little sway over what some giant like Visa decides to charge us. But with a little persistence, you may be able to win big savings for yourself.
Here are some things you may be able to negotiate:
- Interest Rates. The most popular ploy that credit card companies use to try to win your business is to offer great introductory deals. Sometimes that includes letting you swap your old debt to a new credit card for free. But right now, card companies don’t really want your old debt. So balance transfer fees are high and getting higher.
“They’re charging high balance transfer fees because they don’t really want that old debt on their portfolios,” Shahani says.
But that still leaves plenty of room for negotiation. Because as balance transfer fees rise, more card companies are extending their introductory grace periods, during which time they charge zero interest. Some companies are offering zero interest for up to 36 months, Shahani says.
That’s a good opportunity for you. Instead of recycling all those credit offers, keep them. Compare their introductory offers, and calculate how much money it would save you to begin making new purchases on a new card. Also, look at the annual percentage rate after the introductory expires, and save the ones that offer lower rates than your current cards.
Next, take the best offers to your current card company and say “Let’s make a deal.” They may offer you a lower interest rate to keep your business.
- Annual Fees. Many credit cards charge annual fees. To your advantage, many others don’t. After collecting mailers for a while, call your credit card company and tell them you’re considering switching to a new card that has lower or zero annual fees. They may give you a deal.
- Late Fees. These are harder to negotiate, but not impossible. Especially if this is the first time you’re late on a payment, try calling to see if the card company will knock a few dollars off the fee. If it doesn’t work at first, suggest that you’re looking into switching cards if they still refuse to waive the fee.
Christopher Maag Contributing writer for Credit.com, Chris graduated with honors from the Columbia University Graduate School of Journalism, and has reported for a number of publications including The New York Times, TIME magazine and Popular Mechanics. Reach Chris via email at chris@credit.com.
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