How to negotiate lower credit card rates

A key part of your debt repayment plan needs to be the renegotiation of lower interest rates on your debt. You can save your considerable amounts of money with just a few easy steps and free up cash that you save for a rainy day.

• Before you start, make sure you that you have an excellent pay history. Keep in mind that if you have paid late, you will not necessarily have the upper hand. While the credit card companies still want to keep you as a customer, they want to cater to customers who are most likely to pay on time and to carry a balance.
• Don't threaten them. It is important to understand that negotiating is a delicate art. This will make who you are talking to less defensive and more likely to help you.
• Do not ever tell them that you are going to have to file bankruptcy if they don't help you. This statement completely blows the image of a long-time valuable customer that you want to project in this situation. You never want to threaten to file bankruptcy unless you are really in trouble.

• Make sure that you negotiate for the lowest fixed rate. People in the industry know that introductory rates are just a way to lure you away from other companies. While very low introductory rates can help you reduce your debt and make repayment easier, the key is what the fixed rate will be after the introductory period expires.
• Make the credit card company an offer. A fixed interest rate around the prime rate (currently about 8.5%) is a good rate to start with. Some offer fixed rates as low as 7%. Keep in mind that if you cannot get them to go this low, even 9% and 10% may be acceptable.
• Don't bother bluffing. If your credit card company is unwilling to help you, shopping around for a better rate with another company may not be such a bad idea. This is only recommended if you already have substantial credit card debt that you just need to pay off and will not rack them up again. Debt repayment experts recommend that you shred the checks they send and chop up the new cards when they arrive.
• Cut up those cards! If you have made the effort to negotiate lower rates, you must become serious about becoming debt-free. If you have not done so yet, cut up all credit cards. Keep in mind that you do not need one "for emergencies" if you have emergency money saved. You can replace using a credit card with a debit card or even a cash deposit.

Once you get your rates lowered, you can be debt-free much sooner and save yourself thousands of dollars in interest. Exactly how much you can save varies with balance amounts and interest rates. Here is just one example:

If you have one credit card with a $3000 balance at 17% interest it will take you 68 months to pay it off making minimum payment of $30. You will end up paying $1059 in interest over the life of the debt.

If you keep all other factors the same and reduce your interest rate to 9% it will take you 59 months to pay off the debt and you will end up paying $476 in interest charges saving you $583 dollars

If you keep all other factors the same and reduce your interest rate to 7% it will take you 57 months to pay off the debt and you will end up paying $357 in interest charges saving you $702 dollars from the original interest rate.