You’d think that after all my nattering on about paying the lowest possible interest on your debt so you can get it paid off faster, that I’d be seeing fewer people with high-cost cards. Not so. With interest rates rising, credit rules tightening, and the world in turmoil, people seem desperate to get credit and are willing to pay anything. Witness the 36% consolidation loan I uncovered in one couple’s finances. Really? A consolidation loan at 36%. Why bother?

For those who have take my message to heart – and there have been plenty – but just don’t know how to go about negotiating with creditors, here are a few tips.

First, you have to have a pretty good credit record or be on the verge of bankruptcy to get anyone to listen to you. Why? No lender wants to lose a prime customer with a pristine credit history. But if your circumstances are dire, lenders are also willing to cut lots of slack in order to get a least a part of their money back. This is the tactic used by Debt Settlement organizations to get your credit bill cut in half.

Second, you must be very persistent. Very, very persistent.

Next, call the customer service department and asks for a lower rate. Your call will go something like this:

Hi, my name is Molly McGoo and I am a good customer, but I have received several offers in the mail from other credit card companies with lower interest rates recently. I want a lower rate on your card, or I’ll just have to cancel my card and switch to one of those less expensive companies.

or

Hi, my name is Molly McGoo and I have a really big problem. I have quite a few credit cards and I’ve been dumb enough to rack ‘em all up and now I can’t make the payments. I owe you $______________, but I owe about $25,000 in all, and if I can’t figure out how to deal with all of this, I’m going to have to go see a bankruptcy trustee. Is there anyway you can help me not do that?

Some lenders will give you a lower rate simply because you asked. Imagine that. Of course, others will say there’s nothing they can do. If you’re denied a rate reduction, don’t give up. Wait a couple of days and try again. You may reach a more cooperative customer service rep. If it doesn’t work on your second try, escalate the call.

Ask for a supervisor. Explain your situation again and then ask, “What can you do to help me out?” If he can’t do anything, ask for a manager.  If she can’t do anything either, keep escalating the call. You want to find the body that CAN do something.

If you have a good credit history, remind the guy you’re talking to that other card issuers want your business. Be polite. Stress how much you like your card. But be firm. You’re not going to settle for your crappy rate. You’ll move the business. They may reduce your rate on the spot. Or they may say they need to look into it and will get back to you. If they don’t, call again.

If you have a crappy credit history, remind the guy you’re talking to that you are desperate, that he is only one of many creditors you’re speaking with, and that if you can’t find a way out of this mess you’ve made of your financial life, then you’re willing to bite the bullet, declare bankruptcy and start fresh.

I’ve had couples negotiate up to 10% off their interest rates. Corrina of “Corrina & Jay” got her card company to waive all the interest accrued on her account for a set of cheques that would pay off the principal. And when a couple applied to their bank for a consolidation loan and were quoted a rate 7% higher than it should have been for their circumstances, I told them to tell the bank to shove it. They did. And they ended up with another financing alternative that was 7% cheaper.

Why would you pay even $10 more to a credit card company than you absolutely have to?

BTW: If anyone in the Stayner/Wasaga Beach/Collingwood area has started a Gail Club, I have someone who would like to join you. Let me know at getgvo@gmail.com and I’ll point her in your direction.