As I mentioned in a post yesterday, I recently got a credit card charge I was not so happy about; my health insurance company charged me over $400 more than they were supposed to, which made my balance higher than I was comfortable with. The charge will be taken off my card before I have to pay my bill, so I won’t have to put up the extra $400, but it still made me anxious. But I still had a feeling that I’ve definitely experienced before: the sinking feeling that comes with my credit card bill being too high.
In an ideal world, paying off my credit card would never feel tight. It would always be ridiculously simple. And most months, it is really simple to pay my bill in full, because I only put what I can afford onto my credit card. But when I had my first full-time job and more expensive rent, I would rely on my credit card more heavily than I do now, and even though I’d still be able to cover my whole bill, it would put stress on me and my account.
The money section of U.S. News recently published an article about the solution that has an 80% success rate: calling and asking to lower your APR rate, or even calling to waive your late payment fee. The article says,
“If you’re unhappy with how high your card’s APR is and you’re willing to pick up the phone and ask for a reduction, your chance of success is 79 percent, according to a recent survey from CreditCards.com. When it comes to getting the bank to waive a late payment fee, your chances are even better – about 90 percent.”
The reason many people haven’t had luck with this is because most people don’t bother trying: according to the article, “the aforementioned survey showed that only about 1 in every 5 American credit cardholders has ever asked to have a late payment fee waived or an interest rate lowered.”
On this topic, I have had extremely good luck calling my bank about overdraft charges. I am a recovering chronic overdrafter (TM), because I used to exclusively use my debit card while keeping most of my money in savings, not my checking account. (I have since gotten my shit more together, and in addition to now using a credit card, I have texts that tell me when my checking account balance is low.) However, whenever I overdrafted, I would immediately either live chat or call my bank. And almost every time — even when they told me this was the last free pass they were giving me — they would refund the $30 charge to my account.
A few months ago, I paid a share of my taxes (yay quarterly tax!), and when the money came out of my account, I had forgotten to transfer the money into my checkings, and my account immediately overdrafted. I was nearly-delirious with a fever and wasn’t looking at my phone, so when a Venmo charge came out of my account, I overdrafted again. Then, I kid you not, a second Venmo charge came out of my account, and I overdrafted a third time. The next day, once my fever had gone down, I called my bank and told them it wasn’t fair to be charged three times when the second two overdrafts were a result of the first. They refunded the money immediately. The lesson? Call. Talk to a human being. See what they can do for you. Often if you’re a good customer with a reliable financial history, they’ll be able to help.
Going back to the credit card solution, asking the bank to lower your APR rate can save you a lot more money than you expect, especially if you’re currently working with a running balance on your card. The author of the U.S. News piece, Matt Schulz, writes, “The typical late payment fee is $38, but the savings from a reduced APR can be far greater. Say you have a $5,000 balance on a card and you pay $150 each month. If the card’s APR is 15 percent, you’ll pay more than $850 less in interest than you would if your APR was 20 percent.”
Honestly, there are some parts of personal finance that are a huge gamble; of course, the stock market can dip down at any moment, and even consolidating your debt onto one no-interest credit card isn’t always a safe bet (because you have to pay off the debt before your offer expires, which isn’t a guarantee). In those situations, there are consequences if you try a financial solution, and it doesn’t work out. But in this case, it’s doubtful that anything bad will happen if you try to ask your bank to lower your APR or waive your late fee. And thanks to this article, we now know that the biggest thing getting in the way of people and this easy solution is that people don’t bother trying to call the bank. For negotiation tactics that you can use when talking to your bank, check out the original article here.
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