The Debt Detonator: A Plan for Eliminating Credit Card Debt – Step 2


Updated on Wed May 21, 2014

From the previous posts:

Step 1-Calculate Your Debt to the Decimal Point

Step 2

Lower Your APRs

In my last installment I introduced you to my friend Oliver, who I am teaching my five step debt reduction strategy to. Oliver – and all of you readers – have diligently followed Step 1 and have created a spreadsheet listing your credit cards, minimum monthly payments, Annual Percentage Rates, balances per card, and total amount of debt.

Now you and Oliver are ready to focus on one of the most critical columns on your spreadsheet – your Annual Percentage Rates . The only thing required to successfully complete this step is a phone and a little bit of confidence.

Compile a list of each of your creditors’ phone numbers, which can be found on the back of your cards or on your monthly statements. Now, one by one, call each number and ask the customer service rep to have the APR lowered on your account. This will ultimately save you hundreds if not thousands of dollars in finance charges.

If you have been paying your bills on time and have a good relationship with the company you will most likely get your APRs lowered. But even the customer rep says no, you can respond that you’ve received better offers from other companies and that you will close your account with them if they don’t give you a better rate. If the answer is still no, ask to speak to a supervisor and reiterate the above.

Plastic Surgery: Quick Credit Card Makeover:

Let’s see what happened when Oliver called each of his creditors:

Creditor 1: 18.99% APR lowered to 14.99%. Balance on card: $12,000

Creditor 2: 17.99%: APR lowered to 12.99% Balance on card: $5,000

Creditor 3: 19.99% APR lowered to 15.99% Balance on card: $50

How much has Oliver saved over a year, assuming that his balances have remained the same?

Total Savings Per Year: $722.

Wouldn’t that be better spent on a trip to Bermuda?


Other Important Things You Should Know:

  • Getting your rate lowered is sometimes like a game of limbo — sometimes the first rate that the credit card company offers you is not as low as they are willing to go. For instance, a certain credit card company was charging a me a really high rate of 20.99% and initially offered to lower the rate to18.99%. I politely but assertively replied that the rate was still too high. Their final offer, while still on the high end at 15.99%, was at least 5% points lower than what I had started out with.

  • Make sure to read the fine print on all of your monthly statements or any correspondence from your creditors. Oliver once had a creditor raise his APR from 9.99% to 19.99% . It took him five months and a lot of payments in finance charges before he figured out what was causing his balance not to go down.
Read next:

Step 3


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