The get-out-out debt double whammy starts by playing chicken with your bank
You owe $8,000 on a credit card at 18% interest. If you make the minimum payment of about $200 a month it will take you over 26 years to pay it off
and you will pay over $11,000 just in interest. Ouch. Take that same $8,000 balance but cut the interest rate to 9% and your minimum payment is now
about $140 a month. That seems a lot better, right? Well, not much. Making the minimum payment it will still take you close to 25 years to pay that
card off and you will end up paying a substantial $5,600 in interest.
But what if can lower your interest rate and take the $60 that you saved and apply it to your monthly payment? Now you're paying $200 a month
instead of the minimum of $140, but $60 is going directly towards principal. In this case it will take you 48 months to be rid of your debt and in that time
you will only pay about $1,500 in interest.
Lowering your credit card interest rates and applying the "saved" money to your monthly payment is a great strategy to get out of debt.
With that in mind, if you have a have high interest credit card you should be laser beam focused on lowering your interest rate. As you have seen you
will save money on your minimum payment which can be applied to a payment that will save you thousands of dollars in interest and years of
monkey-on-your-back payments. While it may be clear to you that lowering that monster interest rate makes perfect sense, your bank or credit card
company may decide not play along as nicely as you would hope.
If You Have Very Good Credit
Step one: Pick up the phone and call your bank. Be nice, but don't beat around the bush. Ask for a lower rate. How low? If you have good credit and
have been a valuable customer (i.e. you pay on time) you should be able to get a rate of about 10% or less. If the customer service agent isn't helpful,
ask for a supervisor. If that doesn't work trying calling back in a few days. Make it clear that as a loyal costumer you would hate to leave, but