That Smith

Everyone knows that the number one rule of personal finance is spend less than you make. I suppose the second rule of personal finance (and the first rule of using credit cards) is pay your full balance every month. Unfortunately, following both of these rules is not always easy. If you are reading this site then you have probably had an issue with one of these rules somewhere along the line.

If you are like me, and have a balance on a credit card that you are trying to pay off, then let’s ask ourselves – what interest rate are we currently paying? If you are unable to answer this question then you should consider smacking yourself right now because you should always know where your debts lie. If you can answer the question then at least you have the right idea. Now ask yourself, when was the last time you asked for a rate reduction?

It seems to me that I receive all these wonderful offers for credit cards, rewards cards, and other nonsense several times a week. All of which advertise an even more wonderful introductory rate. Granted, some credit offers might be able to help you pay off your debts quicker, but that’s not why you are receiving them. If you have already considered a balance transfer, maybe you should also see about getting your current interest rate reduced too.

In most cases, as long as your account is in good standing, and you have established a history of paying your card on time and not going over your credit limit, simply calling your bank to ask for a rate reduction is all it takes. I called my bank shortly before transferring the balance of my student Visa card to Blue from American Express to simply ask them if they would reduce the rate on my card since my account had always been in good standing. The conversation went something like this:

• Customer Service: Good afternoon, thank you for calling Visa customer service, this is probably-a-made-up-name, my representative number is 2345678, how can I help you?

• Me: Yes sir, good afternoon. I have been a loyal customer of yours for about large-number years now and my account has always been in good standing. Recently, I have been seeing some pretty good incentives to transfer my balance to another bank, so I wanted to see if you could do anything about my interest rate.

• Customer Service: Certainly, let me pull up your information. Do I have your permission to access your account?

• Me: Yes.

• Some typing…

• Customer Service: Well sir, it does appear that you have a good history of paying your bill on time. I can go ahead and change your rate to 15.99%. Does that sound alright to you?

• Me: Hmmm… that does sound nice, but it’s still pretty high compared to some of the offers I have seen. Are you sure you can’t do anything else?

• Customer Service: Let me check with my supervisor. Would you mind holding for a moment?

• Me: Sure.

• Duran Duran hold music… awesome.

• Customer Service: I spoke with my supervisor. She said I can go ahead and lower your rate to 13.9%. Does that sound ok to you?

• Me: That sounds fair enough. Thank you.

• Customer Service: Alright, have a nice day and thank you for choosing Visa.

I didn’t have to plead, threaten, or beg, and the worst that could have happened is they would decline. In that case (and as it turned out) I could always take my business elsewhere. Had I not transferred my balance to American Express, reducing the rate alone would have allowed me to pay the debt two years sooner and would have saved me $800 in doing so. Even if you do pay your balance every month, you might as well ask for a rate reduction just in case.

Photo: Cliph