Negotiate Your Way to Lower Bills
Guest contributor Nico Leyva explains an unconventional way to cut spending on your monthly bills
August 22, 2013 by Nico Leyva
No one likes paying bills—especially when it seems like the amount you pay each month keeps rising. Some utility providers and lenders depend on their large market shares as well as their customers’ apathy to quietly increase the amount you pay each month with fees and extra services.
That cable package you ordered with all the extras included at no extra cost? That only lasts for six months, and then you have to start paying for all that “free” stuff. A lack of familiarity with the process and the prospect of complicated automated phone systems can make negotiating for lower rates seem hopeless.
That’s no reason to give up. You can negotiate lower rates and terms on bills for services including credit cards, loans and utilities like cable and electricity. Here are a few handy tips and some practical suggestions to help you accomplish that.
Have Your Information Ready
Gather your current information before you contact your lender or service provider. Know your current APR, your current terms of service and your total payment history. You can point to this as evidence of being a good customer and avoid being tricked into the same rate or a higher rate.
Know Your Credit Score and Credit History
Don’t walk into a negotiation blind. You will not be able to negotiate a lower rate on any of your loans or credit cards if you don’t know your credit score and payment history. The higher your score, and the better and more consistent your payment history, the easier it will be to ask for a reduced rate.
Ask, “Am I Receiving the Best Rate for My Credit Score?”
If your credit score is not optimal or your repayment history has inconsistencies, it may not be a good time to ask for a lower rate. If you do proceed, be prepared to provide proof of income through pay stubs or bank statements, should your lender choose to investigate your ability to repay more thoroughly. Be aware that this could result in a higher rate or lower credit limit if your lender decides your credit history is not optimal.
Look Into a Balance Transfer
Another option is to transfer your credit card or loan balance to a card with a lower rate. This plan should only be considered if you can pay off the credit balance within a reasonable amount of time. Watch out for balance transfer fees and the duration of introductory interest rates. Cards with 0% interest are usually limited-time offers, and the interest may revert to a higher rate after the introductory period has ended.
Shop Around and Watch for Promotions or Deals
Use current promotions or deals from competitors as grounds for a rate decrease. Do your research and find out what other companies are offering for the services you already have. If the provider refuses to match those rates, be prepared to say you are ending your service. Call when your contract is nearing expiration so you do not incur early termination fees.
Lenders and providers want to keep you from switching to a competitor. They will often agree to reduce rates in order to maintain your loyalty, especially if you have a history of good payment.
- Be persistent. Call centers may have you on hold for long periods of time. Ask for a supervisor if the service rep cannot help you.
- Call again. It may take two or three tries before you succeed.
- Get your reduced rate offer in writing. Don’t rely on a verbal agreement.
- Utility tips: limit electricity waste. Turn off light switches and unplug adapters from the wall before you leave your residence. Manage your usage to reduce bill amounts.
- Improve your credit score. The best way to get in a position to benefit from lower rates is to raise your credit score by making loan and credit card payments on time.
- Try a different cable package. If you don’t really need every movie channel, downgrade to a less expensive cable package.
- If you are in desperate need of lower rates on your bills, you may need help with your finances. Utilize financial counseling and try a credit repair kit to help you get you back on track.
Have you ever negotiated a lower rate on cable, electricity or a line of credit? Share your success story in the comment section below.