Credit Card Crash Course Pt. 2

The majority of this post is promotional material straight out of this book.


What to Do If You Miss a Payment

Nobody’s perfect. Despite my warnings, I understand that accidents happen and you might miss a payment at some point. When this happens, I use my Indian heritage to beat the companies by negotiating with them, and you can, too:

You: Hi, I noticed I missed a payment, and I wanted to confirm that this won’t affect my credit score.

Credit card rep: Let me check on that. No, the late fee will be applied, but it won’t affect your credit score. (Note: If you pay within a few days of your missed bill, it usually won’t be reported to the credit agencies. Call them to be sure.)

You: Thank you! I’m really happy to hear that. Now, about that fee . . . I understand I was late, but I’d like to have it waived.

Credit card rep: Why?

You: It was a mistake and it won’t happen again, so I’d like to have the fee removed.

(Note: Always end your sentence with strength. Don’t say, “Can you remove this?” Say, “I’d like to have this removed.”) At this point, you have a better-than-50-percent chance of getting the fee credited to your account. But just in case you get an especially tough rep, here’s what to say.

Credit card rep: I’m very sorry, but we can’t refund that fee. I can try to get you our latest blah blah marketing pitch blah blah. . . .

You: I’m sorry, but I’ve been a customer for four years and I’d hate for this one fee to drive me away from your service. What can you do to remove the late fee?

Credit card rep: Hmm . . . Let me check on that. . . . Yes, I was able to remove the fee this time. It’s been credited to your account. You don’t believe me that it can be so simple? It is. Anyone can do it.

Negotiate a lower APR.

Your APR, or annual percentage rate, is the interest rate your credit card company charges you. The average APR is 14 percent, which makes it extremely expensive if you carry a balance on your card. Put another way, since you can make an average of about 8 percent in the stock market, your credit card is getting a great deal by lending you money. If you could get a 14 percent return, you’d be thrilled—you want to avoid the black hole of credit card interest payments so you can earn money, not give it to the credit card companies.

So, call your credit card company and ask them to lower your APR. If they ask why, tell them you’ve been paying the full amount of your bill on time for the last few months, and you know there are a number of credit cards offering better rates than you’re currently getting. In my experience this works about half the time. It’s important to note that your APR doesn’t technically matter if you’re paying your bills in full every month—you could have a 2 percent APR or 80 percent APR and it would be irrelevant, since you don’t pay interest if you pay your total bill in each month. But this is a quick and easy way to pick the low-hanging fruit with one phone call. 

Pay off your Debt Aggressively