How to Reduce Interest Rate on Credit Cards Through Hardship
Households that had at least one credit card had an average of $10,679 in credit-card debt at the end of 2008, according to financial web site The Nilson Report. For households that have experienced a job loss or serious illness, making credit-card payments can prove to be a struggle. Fortunately, credit-card companies offer hardship programs that can reduce the interest rate on this debt, making it easier for households to pay it off.
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Things You'll Need
- Copies of last two years' worth of tax returns
- Copies of most recent bank savings and checking account statements
- Copies of retirement account statements
- A budget showing monthly expenses and revenues
- Copy of most recent credit-card bill
Instructions
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Working With A Hardship Program
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1
Gather the financial records you'll need to argue that you are suffering a financial hardship. This includes copies of your two most recent tax returns, bank saving and checking accounts and retirement account statements.
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2
Tabulate your monthly expenses and revenues as accurately as possible. This will help you determine exactly how much of a lower monthly payment you'll need to make to your credit-card company.
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3
Call your credit-card company. Ask to talk to a supervisor. Tell the supervisor that you're interested in participating in a financial hardship program, and that you'd like to drop your interest rate. Credit-card companies don't advertise these programs, but most of them do have them.
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4
Explain to the supervisor the nature of your financial hardship. If you've lost your job or suffered a drop in annual income, mention this. If you've suffered a serious illness or injury that has dropped your income-earning potential, mention this, too.
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5
Agree to a compromise. Your credit-card company will probably not drop the amount of money you owe. But the company may be more willing to slash the interest rate on this money. This can significantly drop the minimum monthly payment you owe every 30 to 31 days.
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Tips & Warnings
You can increase your chances of qualifying for a credit-card company's financial hardship program by having a good credit score---which requires paying your bills on time---and by sending in more than the minimum monthly payment each month.
Applying for a financial hardship program can hurt your credit score. Be careful, too, not to expect too much. It's unlikely that a credit-card company will drop an interest rate from 16 percent to 2 percent.
