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Stretching your pennies

In the current credit crunch, stretching your pennies is more important than ever. An easy -- and relatively painless -- way to save money is to negotiate with your credit card company for a lower interest rate, particularly if you have a long-term relationship with the company.

Just pick up the phone and request a lower rate. Try for 9% or 12%, (anything is better than the average 21-23% paid by post consumers). You'll be surprised by how easy it is (I tried this myself after seeing it on a television program – and it worked. I went from 18% to 9% in one phone call!)

Follow these easy steps:

1. Be sure to start with a card from a company with whom you have a long-term relationship (one where you've never been late with payments).


2. Dial the customer service number (located on the back of your card).


3. Start negotiating.

Now it's time to get what you want. Don’t know what to say? Follow this easy script.

You: I just got this incredibly great offer in the mail for a new credit card that has an introductory interest rate of only 5.9%! I don't really want to switch cards, since your service has been great. But even though I've had your card for three years, I'm still paying a 17% rate on my balance. I’m going to have to transfer my balance unless you can lower the interest rate.

Customer Service Rep: Well, 17% is the going rate … let’s see …

You: Sure, but I can pay a lot less in interest if I transfer my balance. I really need you to reduce the rate to 9% or so.

Customer Service Rep: Let me check with my supervisor … OK, how about 9.8%?

You: That would be great – thank you.

This may not work as well if you're frequently late with your payments and are deep in debt. But it can't hurt to at least ask for an interest rate reduction on all your cards. If you have a solid track record, your lender should be willing to offer you a lower rate to keep from losing you to the competition.

4. Keep trying.If you don't get what you want the first time, call back and speak to another customer service rep or supervisor. Still no luck? Mark your calendar and call back in a few months (during that time, it is important that you make timely payments).


5. You might want to combine your debts onto one or two of your lowest-rate cards if you can. (If you're maxed out on those cards, then forget it.) Simply call your lender and ask how to transfer funds. And be sure to find out what fees -- if any -- you’ll be charged.

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