Consumers carry a lot of weight when it comes to interest rates. It
can sometimes be a lot more straightforward to negotiate on interest
rates than people think.
Consumers can negotiate with lenders on some financial packages
before they sign on which happens a lot with mortgages. Mortgages
are often flexible packages that can be negotiated to beat
competitors etc. Credit card deals may be harder to negotiate lower
interest rates before you sign because they are generally fixed
packages.
However, after signing it is almost the reverse. A mortgage company
is less likely to change the interest rates because the effect it
has on the return on their investment is very significant. However
with credit cards and small loans consumers may find they can
negotiate lower interest rates.
Negotiating lower interest rates is easier when you have a good
credit history. This is because you have established that you are
responsible with your finances, and it looks less likely that you
are trying to get out of paying money.
It costs money to take consumers to court for failing to repay their
credit card loans and if legal proceedings take place, it is likely
that the consumer will repair the amount over a period that suits
the financial situation.
This is the reason why it’s so easy for consumers to contact their
credit card company and try to negotiate lower interest rates. And
remember, it is very easy to get a different credit card and
transfer the balance. So the credit companies have two options, lose
your custom or lower their rates.
Tips for negotiating
It is always better to write letters to negotiate because
conversations are worth nothing if things turn nasty and it goes to
court.
You must avoid being confrontational or nasty because this simply
gives the impression you are not taking responsibility of yourself
and that you’re not trying to resolve the issues properly.
You must be fair in your negotiations. Individuals can’t make huge
demands on the big companies because they are likely to be ignored.
Don’t threaten them with non-payment or filing for bankruptcy. These
are not good ways to approach your creditors and they are likely to
simply prove in court that you were not wiling to take
responsibility of your own finances.
When you negotiate, try to be realistic but also try to lean things
in your favor. If you negotiate interest rates, try to negotiate
fixed rates with realistic payment periods.
If you negotiate a change in your interest rates and your creditor
accepts, you must make sure that you stick to your new commitment.
If you fail to keep up with your new payments then it makes things
harder for you if your creditor takes you to court. This is why it
is important to be realistic in your negotiations.
