Lower APR/Finance Charge Credits!

[christine1]

I followed the Debtgoal script to try to reduce my current 16.24% APR on my Chase Rewards account. I was transferred to a manager after first speaking to the customer service rep. She said she could not reduce my APR but she would credit my account 3 months of finance charges which totaled $210! I know this isn't a long term solution but the manager said to call back in January when my account was up for review.

[ThriftyMan]

Christine. Great work! I think that's a great result. $210 is a good chunk of change and the 3 months of finance charges is really like a 25% reduction in APR for the year. All around fantastic.

I love to hear when people are successful. Thanks for sharing and good luck when you call them back. In general, people who are sticking to the DebtGoal program find that the combination of consistent on-time payments and reducing debt leads to an improvement in their credit score which definitely helps when it comes time to ask for a better rate. Just keep making progress and I'm sure you'll be successful.

[christine1]

I have 2 more success stories to report. I called Discover Card, asked to speak with a manager again, and they lowered my rate from 14.49% to 12.99%. Then I called my TJX Rewards Mastercard (that is issued by GE Capital) and they said they could not lower my rate of 15.24%. I informed them that Chase Rewards gave me three month credit of finance charges and asked if they were willing to do this to save my business. He put me on hold for a very short time and said he would give me 2 months, that finance charge credit was $135.68! I have been a member of Debt goal since April 2011 and have already paid back $7270 towards my debt. I have a few more credit cards to call but the balances are falling!

[ThriftyMan]

Christine

Wow. Great work on getting the concessions. Interesting that we've seen a couple different issuers give you finance charge relief instead of rate concessions. But you're really having good success and I'm sure your example will motivate others to pick up the phone.

And above all, a big congratulations on all your progress. $7200 is an amazing amount of progress. You're really doing a great job.

[christine1]

I have recently call Citibank to see if my closed account, with a $7900 balance, could be renegotiated in regards to the terms or interest rate. I have never been late on this card an I only closed it due to the fact that they were going to increase the interest rate to 14% two years ago so I opted to close it. The rep at the call center said something very interesting- he basically told me not to make my payment on September 9th and he said to call back on the14th and then "I would have more options." I have understood that if you claim hardship in paying off your debts and that if you are proactive about calling, many card companies will reduce or eliminate your interest rate for 6-12 months. My question, does this actually affect your credit rating since you are still working under their terms? Also, no late payments should be reported, I assume, as long as the negotiated payment each month is made on time. Any thoughts that you have on this would be greatly appreciated.

[ThriftyMan]

Most banks have hardship programs. But you have to look at it from their perspective--they don't want to reduce the interest payments unless they absolutely have to. Programs like hardship programs let card issuers reduce the payments to keep you paying them instead of defaulting or declaring bankruptcy. So most issuers look for evidence that you're really, really stretched. Usually this means that you're late making your payments, your credit score is falling, etc.

I can't speak for the policies of any specific banks, but most don't have a hard and fast rule that you be behind in your payments. Rather, they're just looking for verified evidence that you'll struggle to make payments--for instance, proof that you've recently been laid off and it will be ahrd to make payments. In this case, it's possible that the rep is right but it's also possible he was just being nice, but giving misguided advice. In this case, following bad advice could really hurt your score. If you play chicken with the bank and don't pay on time, it's possible that they'll report the late payment and then your credit will suffer.

Sometimes a hardship program will be noted on your credit report, but it shouldn't impact your credit score unless there's a reduction in principal which can negatively impact it.

Again, there's no hard and fast rule. If you're truly struggling, I'd try to provide proof of that to the issuer. I don't think it's worth going past due on your account to see if they'll negotiate with you. You closed this account 2 years ago which means it will probably be paid off in another 2 years. I don't think it's worth it to run the risk of hurting your credit in this case when you're already making good progress on it.

Hope this helps. I am a fan of the hardship programs if you're truly struggling.

I think in the

I have recently call Citibank to see if my closed account, with a $7900 balance, could be renegotiated in regards to the terms or interest rate. I have never been late on this card an I only closed it due to the fact that they were going to increase the interest rate to 14% two years ago so I opted to close it. The rep at the call center said something very interesting- he basically told me not to make my payment on September 9th and he said to call back on the14th and then "I would have more options." I have understood that if you claim hardship in paying off your debts and that if you are proactive about calling, many card companies will reduce or eliminate your interest rate for 6-12 months. My question, does this actually affect your credit rating since you are still working under their terms? Also, no late payments should be reported, I assume, as long as the negotiated payment each month is made on time. Any thoughts that you have on this would be greatly appreciated.

[christine1]

Thanks so much for your thorough response and perspective on this. I think I am going to try it with the closed Citibank account since I don't have much to lose on this one. Both call center reps (one in the Phillipines and the other in Sioux Falls) offered that I would have more options if I went a few days past the due date. I will not go 30 days past due so this shouldn't impact my credit score. My family has incurred some budget impacting medical and dental deductibles this past year that have negatively affected our budget so I can justify a hardship along with our other monthly obligations. I will keep you informed of the outcome. Thanks again.

[ThriftyMan]

Christine, please post back on how your experience goes. This would be really helpful for people.

Thanks.

[christine1]

Hi Scott,

I actually didn't follow-up with Citibank but called my Discover Card account to see what their hardship program involved. The customer service rep informed me if I went into the hardship program and closed my account internally (they said they do not report to credit bureaus when it is a short term hardships- under a year), that I would only save $15 per month. Instead, he asked if I would be interested in going into the automatic payment program and offered 2 months of finance charges credited back to my account. This was a significant amount of money since I have quite a high balance on this card (I have a 14.5% APR). I also asked to change the date when my payment was due since it wasn't the most convenient time for me. They also approved that request. I was thrilled with this offer since this was a credit of over $300!
I called another card (Chase) who said that the hardship program wasn't going to save me alot since I already have a low interest rate (15%). They didn't offer any finance charge credits for signing up for their auto pay program.
So I am not using any of my cards (other than Amex) and following the the Savvy Money program- I have paid over $20k off of my balances so far and just focus on the end date when I will not be in debt anymore. I recommend every person that is using Savvy Money to get all of your credit card statements out and call your companies. Not only can you get finance charge credits like the one I described above, you can also lower your APR's by 1 or 2%- this really adds up and is worth your time. Ask for a manager/supervisor, be kind and respectful and say that you still want to use the card but you want to get a better rate. You have nothing to lose - but alittle time. I would allot 15-20 minutes per call since you may get put on hold awhile. I was successful with three of my cards, each lowering them by 1-2 %. They may say to call back in 6 months, when your card is "up for review". Put a note in your calendar and call back- again I believe it is worth the call! Best of luck and hope we will hear some positive posts using these strategies.

[ThriftyMan]

Christine. Thanks for posting the information. I think we're going to take some of that and put it into the newsletter. And maybe link back here.

Your thoughts are good ones:
First, you made all the right moves--you keep paying and didn't hurt your credit.
Second, you really worked the system well to keep asking questions and trying to find people who could help you.
Third, you're really willing to cut off credit to stay on track
Fourth, you put yourself on an auto-payment plan with your lender--that's a great way to ensure you get out of debt.



$20K sure is a lot of progress. But I'm not surprised, given how you handled your lenders.

Keep it up!