Five Tips For Asking a Creditor for a Break
If you have managed to get yourself in a decent position with your creditors and are making timely, monthly payments, you might feel good about the progress you have made. You should. And now that you have a reason to feel good about your situation, there is still more you can do to make your financial situation better.
Ask for a break.
We’re not talking about taking a month off from making payments. That kind of break would be a bad move. The break we’re talking about, primarily, is a reduction in the interest rate you are paying. A reduction in interest means a lower monthly minimum.
Here are five things to consider as you consider calling your creditors and asking for a break.
- Be clear that we are not talking about getting a reduction in the rate because you are in trouble. Not at all. The reduction in rate you are asking for is the result of good behavior. Sometimes a creditor will recognize you for being a good customer and reduce the interest rate you are paying on your debt.
- Many times a creditor will say, “No.” In fact, that is probably true in most cases. No matter. You won’t know until you ask, and it only takes one “Yes” to make a positive difference.
- If a creditor says, “No,” ask what it will take to turn that refusal into a “Yes.”
- Sometimes it pays to give your creditor an ultimatum. We don’t suggest you do this lightly. If you are negotiating with a car dealer you can always tell the sales person that if you don’t get the deal you want you will take your business elsewhere. If you have a long history with a creditor that history is valuable on your credit score. But if you have found an offer that seems better than what you have now with some of your debt, you might consider telling your creditor that you are considering taking your business elsewhere. Again, we don’t recommend you bluff on this one. If you make that threat, we suggest you be willing to follow through. Ultimately you might decide to stay with the creditor you have, but when you tell them, “I might take my business elsewhere,” make sure you are being honest about it.
- Take whatever you are saving and apply that to your debts. If, after calling all your creditors you are saving, say, $20 a month, take that $20 and put it toward one of your debts. If you are spending $500 a month to reduce credit card debt, keep spending that amount.
As you do this work to improve your monthly finances, talk to a credit counselor like the ones at American Financial Solutions. They can walk you through this and other ways to improve your finances and get your credit under control.
Published May 27, 2014.