Knowing the credit card terms will help you manage your credit use better. The truth is, managing your credit card payments is not complicated. However, it does require a complete understanding of the terms that can affect your balance.
When you get your card for the first time, it usually comes with the terms and conditions. This is the “fine print” that you need to read. Admittedly, it can be difficult to read and comprehend. In fact, not everyone reads the fine prints to get to know their credit cards better. In one survey, respondents were asked about their favorite credit card benefits or rewards. A lot of them had an answer, but it turned out, their answer was not offered by their credit card company! That means several credit card holders do not read the fine print! Maybe they read it but only to find out the interest rate. They do not even read about the rewards are it keep them from maximizing the benefits of the card.
If they do not read about the benefits, what makes you think that they make time to read the charges and fees?
It may not seem important to you but you need to know your credit card terms. These terms have a huge effect on your credit card payments. How can you avoid making the mistakes if you do not know what triggers the charges and fees in the first place?
Understanding the terms of your credit card will also give you what you need to improve your payment situation. In case something happens, you know how to negotiate with your creditors to ensure that your debts will not ruin your personal finances.
4 credit card terms you can negotiate
There are 4 different credit card terms that can be negotiated with your credit card companies. You need to be in the right financial situation to be able to negotiate these terms in your favor. Of course, you have to understand these terms thoroughly in order to get the information that you need to have it a favorable way.
Here are the credit card terms that you can discuss with your creditors to improve your repayment plan.
Payment due date
People might think that this is a trivial detail about your credit card account but it can make a huge difference in your monthly payments. If your monthly payments are set on different dates, it can be harder to track. There is a higher chance of you forgetting a payment. When that happens, you might be charged with late payment penalties. And if it goes for a long time, it could have a negative effect on your credit score.
Some people do not realize that they can request a new payment date. You can simply call your creditor and request them to change your due date. This will allow you to organize your finances better. It will make it easier to manage your payments and hopefully, it will be less stressful for you.
Interest rate and other fees
Admittedly, this feels a bit more intimidating to negotiate compared to your payment due date. But among the other credit card terms, this is the most important that should be negotiated if you have the chance. And it if you think that creditors will not agree to negotiate with you, think again. According to reports, more than 8 out of 10 credit cardholders who asked for a lower interest rate were approved. And most of the reductions resulted in an interest rate that is lower by 5% to 6%. If you want to save money on your credit card debts, this is a huge deal already. And it is not just the interest rate that you should try to negotiate. You can also try to negotiate for any penalties or fees to be waived. You will never know if they will approve if you do not ask.
Credit card forbearance
In case you are in a tough financial situation, you also have the option to negotiate for credit card forbearance. Statistics show that every quarter, approximately $1.2 billion is enrolled in forbearance and debt management programs. Both of these involve being approved to pay a lower amount each month because of financial hardship. Some credit cardholders are not aware that they can apply for this. When your finances are compromised, you can declare that you are going through financial hardship. This will allow you to apply for forbearance. You will negotiate with the creditor to allow you to pay a lower amount instead of the usual amount. Sometimes, you might be approved to pay only the interest.
As long as the creditor will agree, you will not be penalized or charged despite the lower monthly payment. This is only effective for a certain period so it is ideal for those who are going through a temporary financial setback.
If you are not sure when your financial situation will get better, you might have to negotiate more drastic credit card terms – a debt reduction. This means you will be asking the creditor to lower the amount that you owe. If something terrible happened to your finances, like a job loss or a terrible and expensive medical condition, you can opt to have your debts settled. You will have to be ready with a lump sum amount that you will use to pay off your debts through a settlement fund. It does not have to cover the whole debt. You will negotiate with the creditor to allow you to pay only a portion of the debt. Anything that you cannot pay with that settlement fund will be forgiven.
This is probably the hardest of the credit card terms that you will negotiate. It is safe to assume that your creditors will not give in immediately. You might have to keep on trying several times to reach an agreement with the credit card company. But once you have agreed on the settlement amount, make sure to ask for written proof of their agreement first. Wait for it to be signed and sent by an authorized representative before you send your payment.
Tips to succeed at negotiating credit card terms
The truth is, negotiating credit card terms can be tricky. However, it is not something that you cannot do. With a bit of determination and some tricks, you should be able to negotiate with your creditors on your own and be successful.
Here are tips that will help you do it effectively and efficiently.
Do your research
Start by educating yourself. When you are negotiating credit card terms, you are trying to get the upper hand. It is impossible to do that if you have no idea what you are doing. This is why you have to educate yourself. First of all, you have to know what you are trying to negotiate. Read the fine print of your credit card account. Once you have a firm grasp of that, you should understand the important concepts of debt negotiations. This will help you know how to begin the negotiation process and what to expect while you are going back and forth with the creditor.
Another important tip that you need to remember is to be polite always. It is the best way to get favorable results when you are trying to negotiate your credit card terms. Be courteous and pleasant because it is easier to get them to agree to what you want. After all, you will be more agreeable if you are talking to someone you like. If they do not agree at first, do not get angry. Be patient and continue to be polite. Keep trying and do not give up. If the first call is not successful, end it and try again after a couple of days.
Put everything in writing
Finally, it is very important to put any agreement in writing. This will ensure that everything that you went through to negotiate credit card terms, will not be in vain just because the other party forgot about it. Or maybe the person you were talking to is no longer connected to the company. This written agreement will be proof that your terms are supposed to change. In case it does not change when the next billing cycle comes, you can show the written agreement as proof that an authorized representative of the company agreed with your new terms. You need to hold on to this proof because it will add to the security of your financial future and any terms that will have an effect on it.