When making financial decisions, the line between smart and unwise can sometimes be a bit blurry. Take for example when a person has multiple emergencies take place in a short amount of time. Credit cards prove to be of the utmost value during times like these, but when the charges aren’t paid back quickly this can lead to the debt adding up to an insurmountable amount. And as most people know, as the debt increases so does the amount of interest that has to be repaid. Fortunately, though, there are steps a credit card debtor can take to lower their APR, which can significantly lower the overall amount of debt that has to be repaid. Here’s a quick look at five of these steps.
#1: Record Your Conversations with Credit Card Representatives
First and foremost, the smartest move to make when negotiating a lower APR is to record the conversations you have with the credit card representatives. In doing this, you can review the APR offers you have as well as secure a deal in the event that you want to take advantage of one. In addition to recording the conversations, you will want to keep a pen and paper handy to jot down important notes. Always make sure you write down the name of the person you’re talking with as well as a contact number so you can get back in touch with the person if need be.
#2: Predetermine the Amount You can Afford to Pay
There’s absolutely no sense in trying to negotiate a lower APR if you know you won’t be able to afford a certain amount. With this in mind, predetermine the amount you can pay and then negotiate for this amount. Most creditors will be satisfied with any amount you are capable of paying as long as you are not filing bankruptcy (if you do, they don’t receive a penny on the debt you owe them). In fact, many of them are willing to more than half-the-debt as long as you pay it up front. In addition to negotiating a lower APR, you might want to consider what type of lump sum amounts they are willing to negotiate for. For example, if you owe $1,800 on a credit card, the card provider might negotiate for an amount as low as $700 or less as long as you pay it all at once.
#3: Use a Counseling Agency
If you feel uncomfortable negotiating a lower APR with your credit card lenders, you can always turn to a counseling agency to help you with the process. Some counseling agencies will even handle the negotiation process for you. Please keep in mind, however, that some of these agencies will charge a fee to handle the negotiation for you which can quickly add to your overall debt amount. Ideally, the best way to save money and not add to your debt is by taking advantage of free resources, many of which are found online and through local community agencies.
#4: Tackle One Debt at a Time
As you lower the number of debts you have, the more likely you are to have creditors who want to negotiate with you. If they see you are lowering your debts, they feel like you are prone to paying off any negotiated amounts you may have already obtained. So, make sure you tackle one debt at a time. This doesn’t mean you can’t negotiate lower APRs across all of your debts, but make sure you stay focused on your largest debts first, followed then by the next largest.
#5: Secure the Deal in Writing
Once a lower APR has been negotiated you will want to get it secured in writing. Tell the creditor to please mail or email you a contract with the new terms as this will help ensure there are no discrepancies in the event the creditor tries to back out on the negotiated APR.
Getting in debt isn’t a bad thing, but it can be stressful if you aren’t careful. The best way to get out of debt is by paying it off as quickly as possible, and the best way to save money is to obtain a lower APR. With a bit of negotiation, you may be able to save thousands of dollars each year in regards to the amount of money you pay toward interest.
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