August 21, 2011

August 21, 2011
4 Secrets About Credit Card Companies

Welcome to another day in my life. Today is Sunday and I hope you are having a safe and great weekend so far. Dab the AIDS Bear and I are still recovering so we are spending a ton of time sleeping this weekend while we recover for a bad virus.

Now traveling on the road most of the year, Dab the AIDS Bear and I use our credit cards a lot to pay for expenses. Not only does it help prevent mistakes in bookings for air flight, hotels and other expenses; but it is also safer than carrying cash around with us while visiting cities away from home.

But do you know about the secrets with credit card companies? Most people do not so I decided to blog on the issue today.

While it may seem like you are at the mercy of credit card companies and others that you owe, in reality, you probably have more power and leverage than you suspect when it comes to dealing with creditors.

Once you discover a few profound truths about credit card companies, you will not only more successfully juggle your financial obligations, but you will also know how to maximize your credit cards for all they are worth.

Here are a few little known secrets about credit card companies that a banker is not likely to tell you.

They are desperate for your business.

Even though they make huge annual profits, banks are reeling financially. For starters, it is costly for banks to market to consumers and attract new clients. TV and print ads are expensive. So is direct mail. Only a tiny fraction of people open junk mail or reply to offers for new credit cards and balance transfer deals.

Plus, because of a host of regulatory changes over the past year or so, and new laws such as the CARD Act, (officially called the Credit Card Accountability, Responsibility and Disclosure Act), which governs credit card issuers, banks are set to lose tens of billions of dollars in yearly fees.

All of this has made banks a bit more desperate to drum up new sources of revenue; a fact that puts individuals with stellar credit ratings in the driver's seat. If you have excellent credit, banks are falling all over themselves to compete for your business especially when it comes to offering credit cards with travel rewards, cash back offers and other perks.

The credit card industry was on a roller coaster ride in 2010.

The first of the year was filled with doom and gloom and there was a lot of talk about higher rates and fewer perks. As the year ended, however, people with good credit began getting attractive credit card offers in the mail, with banks going all out on rewards cards promotions in particular.

These days, neither the CARD Act nor the credit crunch have killed the industry. On the contrary, it seems that at least a few of the juicy card offers that consumers with good credit enjoyed a few years ago are back with a vengeance.

The abundance of tempting credit card offers available means you can pick and choose among the best deals being offered. It will also give you room to negotiate with credit card companies like never before.

They Will Forgive You at Least Once

Speaking of negotiating, have you ever been burned by one of those vexing $35 late fees when your payment failed to reach a credit card company on time? What most consumers don't know is that you can easily have this fee waived simply by calling your credit card company and asking for the charge to be removed from your monthly statement.

The key to a successful request is that you have to have a pretty good track record of paying your bills on time. If you missed four payments out of the past dozen that were due, you're not likely to find a sympathetic ear on the other end of the phone if you call your credit card company.

By contrast, if you have an excellent payment history, the vast majority of banks empower their customer service representatives to waive a late fee, usually once a year.

Let us say you were traveling and neglected to mail your payment before you left, or maybe you were simply busy with work, or thought your spouse had sent in your credit card bill. Whatever the case, if your failure to pay was a one time mistake, your credit card company will likely overlook this transgression. But only if you ask.

To get the late fee removed, simply call your creditor, briefly explain yourself and ask: "Can you please remove the late fee from my statement?" Most representatives will reply by saying something like: "Yes, as a courtesy, we can do that for you this one time."

You Can Negotiate a Lot More Than You Might Think

Getting a late fee removed is not the only thing you can accomplish when negotiating with your credit card company. When most people consider negotiations with a credit card company, they often picture themselves asking for a lower interest rate. While that is a good starting point, there are a host of other things you can also ask of your credit card issuer. Among them:

• Change your payment due date (so that all your bills do not come due at once)
• Upgrade your account from “past due” to "current" status
• Remove a negative mark from your credit
• Accept a partial payment in lieu of the total due
• Waive a card's annual fee

Again, each of these requests will carry a lot more weight for if you are a good paying customer. But there's no harm in asking for what you need even if your credit rating is less than perfect.

They Can Only Raise Your Rate for Six Months

If you have been dinged with a higher interest rate, perhaps because you were late in paying a past credit card bill, do not despair. That penalty or default interest rate does not have to last more than six months.

One provision of the CARD Act, is that there are limits on how long banks can hit you with so called default rates after you have been late paying a bill.

Under the law, default rates can only be charged for six months, provided you pay your credit card bill on time during that period. After six months, your credit card issuer must restore your interest rate to its previous level.

Taking advantage of some of these tips can give you leverage in negotiating with your creditors. This can also help you to better manage your credit responsibly now, and for years to come. Give them a try.

Hope these four pointers help you out while our economy is so rough and so many people are unemployed.

Until we meet again; here's wishing you health, hope, happiness and just enough.

big bear hug,

Daddy Dab