Everyone could use a better deal right now.  Consequently, many consumers are turning to their credit card companies to negotiate or re-negotiate their credit terms.  As you pick up the phone to call your credit card company (or a competing credit card company), remember a basic principle:  the person on the other end of the line has been trained to sell you something.  They may sell you on the idea of debt consolidation or a new rewards program.  Regardless of the pitch, be steadfast in your negotiating mission.  Before you decide to accept a deal you negotiated with your credit card company, also remember the corollary to the first principle: credit card companies are going to make money.  Many of the historical “tricks of the trade” have been abolished or significantly amended by recent consumer credit legislation.  But an article in the Wall Street Journal highlights that despite this new wave of reform, credit card companies are still looking for ways to increase their profits.  The article explained:

“According to Consumer Action’s 2009 credit-card survey, which looked at 39 cards from 22 financial institutions, rates and fees began climbing this spring. The advocacy group said more credit cards now come with minimum cash-advance fees and higher balance-transfer and foreign-transaction fees. ‘There’s no question that issuers are taking advantage of this window before it closes to make as many changes as freely as they’ve been accustomed to,’ said Ruth Susswein, Consumer Action’s deputy director, national priorities.”

With those two principles in mind, enter into any negotiations with your credit card company or any other company carefully.  Just because the person on the other end is being nice and polite does not mean that they have your financial interests at heart.  Before you seal the deal, know exactly what the deal is and how it can be changed.  Many companies will charge you a fee for their business in the form of transfer fees… so even though you might get an interest rate that is better in the short run, the savings are wiped out by the expense of the transfer.  The biggest remaining issue with credit reform is that companies can still unilaterally change the rules, they just have to give you notice now.  That’s a pleasant comfort when you have about a month to pay off a $5000.00 account or be hit with higher interest payments.  Review, but don’t be suckered by incentive programs.  Another WSJ article explains that if you are not planning on paying the account off each month, the benefits of most reward programs will not offset the interest expenses.  Also, don’t be fooled by variable versus fixed interest rates.  Many credit card companies have begun changing their accounts to variable accounts to take advantage or more lenient rules for variable rates.  This is not a mortgage negotiation.  Just because you started with a fixed rate account, does not guarantee that you will stay at a fixed rate later on.  Essentially, every term has a trick attached to it—so know your options and what to look for when negotiating.

Credit card negotiation can have its benefits when you are working with a company that is sincerely looking to help you rebuild.  Unfortunately, so many of these companies are still struggling financially that their objective is company first, consumer second.  Before you incur the costs of an expensive negotiation or transfer, consider a consultation with a qualified bankruptcy attorney.  You may be expending time and resources which result in little change to your financial bottom line.  Trade the credit card companies’ tricks for some good information.