With good credit, you're in good negotiating position
By Erin Peterson
The volatile economy and shaky credit markets are making it more difficult to get great terms on a credit card. But if you pay your credit card bills on time every time, you've probably got more power than you realize. Even in tough times, people with strong credit scores and payment histories may be able to bargain their way to better credit card terms.
"If you have good credit, the world is your oyster," says Liz Weston, author of "Easy Money: How to Simplify Your Finances and Get What You Want out of Life." "Credit card companies are falling over themselves to get your business."
If you've been responsible with your credit, you can take advantage of a wide range of opportunities. Here are six terms that you can negotiate to get better terms on your credit card.
The change: A higher credit limit Why it's useful: If don't change your charging habits, a higher credit limit may increase your credit score. Credit scores rely heavily on your available balance ratio -- the total you've borrowed versus the total available credit you have. While those with good credit scores already qualify for low-cost loans, improving your score can give you a cushion that will help you maintain a good rating if you accidentally pay a bill late in the future. What you need to know: Avoid hassles by asking for small increases. "The company should be able to improve small increases right away, but for higher amounts, you'll probably have to talk with the people who specifically handle credit line increases," says Scott Bilker, the founder of DebtSmart.com.
The change: Waived annual fees Why it's useful: Over time, these fees add up -- with no benefit to you. What you need to know: Even top customers will have a tough time getting fees waived for some cards. "If you've got an airline card or a high-end American Express card, you'll usually have to pony up," says Weston. "But for most other cards, they'll take it off if you ask."
The change: 0 percent interest arbitrage Why it's useful: 0 percent interest terms for six months (or even a year) can benefit savvy cardholders. Cardholders withdraw the money, deposit it in a money-market account, earning interest for the remainder of the 0-percent term. It's often called credit card arbitrage. What you need to know: It's dangerous. "You have to be careful to pay it off before the higher rate kicks in," says Bilker. "But you might be able to make a couple hundred bucks by taking advantage of this type of deal." If you lose a job or have an emergency and can't pay it off, wave goodbye to that interest you earned Be aware that -- the ones with the longest interest-free periods -- are reserved for those with spotless credit.
The change: Waived late fees Why it's useful: No matter how responsible you are, a bungled mail delivery or a missed keystroke can mean your bill gets paid off a day or two late, which can cost you more than $30. What you need to know: As long as you don't make a habit of it, credit card companies will often drop fees for an occasional late payment. "If you're a good customer, they'll usually give you a mulligan," says Weston.
The change: Better loyalty programs Why it's useful: A better rewards package gives you more bang for your credit card buck. What you need to know: Think big. "If you're a responsible credit user, a 1 percent return on your overall charges is the very least you should get," says Todd Mark, vice president of education at Consumer Credit Counseling Service of Greater Dallas. While you probably won't be able to make changes to your current rewards structure, you may be able to transition to a different rewards package offered by your card company. You even may be able to keep the same card and account history after the transition.
The change: A different balance due date. Why it's useful: Changing a due date may help you with your cash flow and financial organization. What you need to know: You don't need a top-notch credit score to change your due date. "It's a very simple [process], and a lot of people don't know they can do it," says Weston.
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Even in tough times, people with strong credit scores and payment histories may be able to bargain their way to better credit card terms.
