How to Negotiate With Credit Card Companies

Reader Question: I've been a model customer for my credit card company for more than ten years. Never missed a single payment in that time. But recently, they more than doubled the interest rate on my card! This seems ridiculous and unjust to me. How can I negotiate with the credit card companies when something like this happens?

For what it's worth, you are not alone in this situation. It's a rising trend right now, and it's rising significantly. In fact, we just posted a response last month for a person who asked why their credit card company was raising their interest rate.

How to negotiate with credit card companies is a popular topic among cardholders right now, and with good reason. Most people are unwilling to accept a doubling in their interest rate -- especially those of use who have been good customers in the past.

I say "us" because this recently happened to me as well. The interest rate on my Citi card went from 11% to just over 19% ... literally overnight. This is increasingly common right now, and in my opinion it's going to get worse over the coming months.

Here's my reasoning for this prediction. The credit card companies are behaving this way because they -- like the rest of the business world -- are in a state of financial panic right now. They have legions of customers who are defaulting on their credit card payments, as a result of economic conditions (job loss, foreclosures, etc.). So they are preparing for the worst by making as much money as they can right now -- even if it means squeezing their best customers with higher interest rates. It's a survival move, pure and simple. Oh, and there's a healthy dose of greed in there as well.

So how can you negotiate with your credit card company if they do this? Well, you could write them a letter explaining how you have never missed a payment and don't deserve such treatment. This could go either way -- it could be ignored, or it could produce a response.

If you do send such a letter or email, I recommend that you threaten to take your business elsewhere (in the form of a balance transfer). Be specific too. Do some research and find a better deal with one of the other credit card companies, and point this out in your correspondence.

I have seen this tactic work for a friend of mind recently. His card company lowered his rate back to where it was before they jacked it up. And his increase was something ridiculous, like 8% to 19%. He is an example of how to negotiate with credit card companies effectively.

What strategy am I using? Well, I am so disgusted by this squeeze tactic that I'm not even giving my card issuer a chance to fix it. I am transferring the balance to a company with a lower rate, and then I'm going to roll it into a mortgage refinance. Goodbye balance, and good riddance credit card companies. I'm not dealing with them anymore. That's my negotiation strategy. :-)

Related articles:

• New credit card regulations approved recently
• Why do these companies target college students?

I hope this answers your question. Remember, you don't have to sit there and take it. There are ways to negotiate with credit card companies to get what you deserve. And when that fails, there are ways to transfer your balance for a lower rate and better treatment. Better still, there are ways to pay off your balance entirely, through debt consolidation loans, refinancing, etc.