Request an Interest Rate Reduction

One of the primary concerns facing consumers today as a result of the economic crisis is how to save money. While some have speculated interest rates on credit cards would be lower as a result of the Federal Reserve lowering its rate, the opposite is true.

Due to the credit crunch, some banks are increasing interest rates and/or changing their terms of service. For example, one credit card company sent a notice along with the monthly bill that stated they were requiring payment of 1% of the total balance.

The notice went on to state that: “This change in how your minimum payment is calculated could result in a higher minimum payment than you’re currently paying. The policy change is required by Federal banking regulators and cannot be declined.”

Thus, if you wanted to decline this change, you would have no choice but to close your account. This notice is not a result of late payments. It is the result of the credit crunch that has banks worried their customers will default on their payments.

Is it fair? No, it isn’t. Can you do something about it? Yes, you can try. If you have credit cards with high interest rates, call the bank and ask to have the rates lowered. Most banks are accommodating because the last thing they want is to have anyone default on payments.

If you have had a spotless record in paying your bills on time, they will offer you a lower rate. You have nothing to lose by calling.

Here is another tip: Pay off the department store credit cards. They have the highest interest rate. That money can be used to pay down your credit card debt.

Another suggestion is that if you do find yourself falling behind on credit card payments to banks, call them and explain your situation. It will say a great deal about how responsible you are and the bank may be more than willing to assist you in paying off the debt.