Jason Steele is a full time freelance blogger who is an expert on credit cards and reward travel. He writes for The Card Journalist and several other leading personal finance sites about everything from how to maximize your Southwest companion pass to the best credit card sign-up bonuses. Jason Steele is also a friend I met at #FinCon13. When Jason offered to write this guest, I never expected a brilliant article applying the same principles I teach in Personal Finance at the C.T. Bauer College of Business.
Years ago, my mother read an article about negotiation, and then proceeded to try to negotiate nearly everything. For a while, she was negotiating with service providers, department stores, and even airlines. And it worked. We were all amazed when she was able to reduce the price of a purchase just by asking a few simple questions.
As a journalist who covers the credit card industry, I am constantly surprised how few people take the time to negotiation with their credit card issuers. Nevertheless, I can show you how Jim’s 7 Rules, Boundaries, and Opportunities for Negotiating Anything can apply as much to credit cards as they do to any other purchase.
Let’s take them step by step:
1. Negotiate Anything and Everything. Credit card users often fail to even attempt to negotiate with their card issuers. Perhaps it is because we have such an impersonal relationship with those who issue credit cards, and besides, who really negotiates with a bank? Rest assured, this principal most definitely applies to credit cards.
Imagine you have just received a new airline credit card that offered 25,000 miles as a sign up bonus. A month later, you see that the same card issuer is now offering 50,000 miles. You can simply contact the bank and ask to receive the higher bonus. This works fairly often, but you will never find out unless you ask.
2. Exercise Your Walk-Away-Muscle. Credit card issuers incur hundreds of dollars in costs to acquire a new customer, and they will try very hard not to let you go. So when your annual fee is due, contact your card issuer and tell them you are considering canceling your card, the equivalent of walking away.
When you do this, you will always be transferred to a different department called retentions. These representatives will usually waive the fee or offer you some other reward in return for your continued business.
3. Practice the Daily Discipline of Patience. In a face-to-face negotiation, you have to be patient to receive the best offer. Yet negotiations with credit card are almost never face-to-face. Therefore, you can try a different type of patience. If you don’t get the answer you want, try politely hanging up and calling back. Surprisingly, different customer service representatives will be motivated or empowered to help you in different ways.
4. Comparison Shopping Builds 3 Kinds of Muscle; Mental (knowledge is power), Emotional (taking time to comparison shop requires the exercise of self-control), and Financial Muscle. One of the keys to smart negotiation has always been comparison shopping. For instance, when you are offered a store credit card, you need to be aware of what other competing cards offer. You probably won’t be able to change the terms of the offer you get in the store, but if you have done your comparison shopping, you will know if their offer is actually valuable.
5. Cash is King in Bargaining. Those who are having trouble making credit card payments will incur a lot of interest and fees. These charges are ripe for negotiation, especially when you can hold out the offer of a quick cash payment. Of course, you won’t be dealing with actual cash (unless you visit a bank branch), but if you agree to immediately authorize a direct bank draft from your checking account, you can get usually a card issuer to waive some, if not all of the interest and fees.
6. Silence is Golden so Shut Up. When you call to negotiate anything on your card, including interest rates, late payment fees, or annual fees, it often helps to let their customer service representative do the talking. These people are tasked with satisfying customers and retaining their business, so it helps to let them keep working on finding a way to help you, rather than interrupting at any point.
7. Timing. Timing. Timing is Everything! With credit cards, as with so many other things, it helps to negotiate when the timing is right. Credit card issuers all tend to increase their bonuses around the same time in order to compete with each other and attract new customers. By waiting until the best offers appear, cardholders can jump in and apply. Doing this can result in sign up bonuses worth hundreds of dollars more than at other times.
When you apply apply these 7 Rules to Negotiate Your Credit Cards, you will earn more rewards while saving on interest costs and fees. In fact, credit cards might be one of the best places to start negotiating.