A credit card can have some pretty significant bonuses, but those can quickly be outweighed by the negatives if you get into financial trouble. One late payment can quickly ruin the fringe benefits the credit card company lured you into signing up for. Your interest rate can be hiked up to 25 percent and you can be charged a $35 late fee. By following a few simple rules, automating your personal finances and learning how to negotiate with customer service representatives, you can save yourself some money and a lot of stress.
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Avoiding the Late Charges
Avoid being late on any credit card payments. It's better to prevent the problem from occurring than trying to negotiate your way out of a late fee.
Create an online bill-pay system from your checking account to your credit card company. This allows absolute minimum effort to pay your bill on time each month, and it takes less than two minutes.
Set up a payment reminder system. Your credit card will likely have an electronic reminder service that sends you an email when your credit card bill is due.
Pay your credit card bill when you first receive your bill. Do not put the bill in a pile of mail that can be forgotten or buried under a stack of papers. If you get email alerts, stop what you're doing and immediately pay it. Out of sight means out of mind for most people, so pay your credit card bill while it's still fresh in your mind.
Setup a direct debit system where your credit card balance can be automatically withdrawn from your checking account. This should be done only if you keep more money in your checking account than is routinely charged on your credit card. Otherwise, you'll be bouncing checks and paying overdraft fees.
Stop Credit Card Interest From Accruing
Pay your entire account balance each month. You should never carry a balance on your credit card from month to month because you are essentially throwing money in the garbage.
Make sure to pay bills on time, every time. One single late payment,
even if by half a day, is great news to a credit card company because they get to raise your interest rates, which equates to more long-term profits for them.
Obtain a zero-percent interest credit card. These are much more difficult to find in a difficult economy, but if you have excellent credit, you may be capable of finding a few hidden gems.
Websites like Bankrate.com or Creditcard.com are great places to start your search.
Credit card-related blogs and blog-hosted forums are also great ways to find credit card deals that are less publicized by main stream media, such as AskMrCreditCard.com or CreditCard.org.
Call your credit card company and try to negotiate a lower interest rate. Say that you would like to continue using your credit card account, but your other cards have a more attractive rate and you would like them to meet or beat those rates if they want to retain your business. Be polite but firm with the customer service agents. (See video link in "Additional Resources," below.)
Applying for Hardship Plan Status
Call your credit card company's customer service line, and ask to be placed into the "hardship program." This has the effect of halting any late charges as well as lowering your interest rate.
Attempt to qualify for the hardship program by explaining your financial situation. If you have lost your job or filed for disability, you are a perfect candidate. You could also try explaining that your monthly cash flow is incredibly tight, certain bills will likely go unpaid, and your credit card payment is top on the list for remaining unpaid since you need to pay for items such as rent, food or a car loan.
Answer the customer service questions as honestly as possible during the application process. If your financial situation is dire, your credit card company could potentially lower your interest rate from the high double digits to the mid single digits (for example, to 6 percent from 25 percent).
The downside to this program is you will certainly lose any further issuance of credit from this company until you are removed from the hardship program.