What I’ve Been Up To

Sorry, Wrong Number?

For years, me — and many other people like me, i.e. financial experts and reporters — have given the following advice: If you want a lower interest rate on your credit card, simply pick up the phone and dial the toll-free number on the back of that card, talk to the customer service rep that answers the phone and ASK.  If you don’t ask, I’d say, the answer will always be no.  And surveys (most notably from US PIRG) showed that asking actually worked in about 50 percent of the cases.

Recently, though, I’ve heard from a number of people who have called their card companies and gotten precisely the sort of results we weren’t looking for.  They were told their credit limits were being cut, their interest rates hiked, their cards shut down.  And I started to wonder: Is calling the card companies triggering the negative reaction?  Are the card companies assuming people picking up the phone are, in fact, so desperate that they need to take these measures to protect their corporate selves?

So….I did some digging. Here’s what I have to report:

Calling your card company will not, in and of itself, trigger a rate hike (my sources were not so definite about whether it would trigger a reduction in your credit line).  If you make a call and are told your rate is going up, then word of that rate hike should already be on its way to you in the mail.

That means, if and when you call your card company you need to watch what you say.  Your card companies have made a bet on you — they are taking a financial risk on you — by lending you money without requiring collateral.  They are looking for information on whether or not you will be able to pay that money back.  And so if you get into a conversation about the fact that you have lost a job, been asked to take a reduction in hours, etc., it is likely that your credit lines may be cut further.  If you are able to pay your bills, there is no need for you to give your company that information.  They will not find it on your credit report.  They are getting it from you.  You deciding that you don’t want to give it up is, in my opinion, perfectly reasonable.

If you are UNable to pay your bills, my advice to call your lenders — card company, student lender, mortgage lender, etc — stands.  Running from your creditors has never been a good idea and it is not a good idea in this environment.  Card companies, like other lenders, are cutting deals to enable you to pay back the money you owe over a longer period of time or with a reduction in your interest rate.  What you need to understand is that they may require you to stop using the card, or to close your account, simultaneously.  That, in my book, is perfectly reasonable too.