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4 Little-Known Secrets About Credit Card Companies

You have more leeway with creditors than you think

En español | While it may seem like you're at the mercy of credit card companies and others that you owe, in reality, you probably have more power and leverage than you suspect when it comes to dealing with creditors. 

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Once you discover a few profound truths about credit card companies, you'll not only more successfully juggle your financial obligations, but you'll also know how to maximize your credit cards for all they're worth.

Here are a few little known secrets about credit card companies that a banker isn't likely to tell you.

They're Desperate for Your Business

Even though they make huge annual profits, banks are reeling financially.

For starters, it's costly for banks to market to consumers and attract new clients. TV and print ads are expensive. So is direct mail. Only a tiny fraction of people open junk mail or reply to offers for new credit cards and balance transfer deals.

Plus, because of a host of regulatory changes over the past year or so, and new laws such as the CARD Act, (officially called the Credit Card Accountability, Responsibility and Disclosure Act), which governs credit card issuers, banks are set to lose tens of billions of dollars in yearly fees.

debt challenge secrets about credit card companies woman with stack of credit cards

Photo by: JGI/Tom Grill/Blend/Corbis

All of this has made banks a bit more desperate to drum up new sources of revenue; a fact that puts individuals with stellar credit ratings in the driver's seat. If you have excellent credit, banks are falling all over themselves to compete for your business — especially when it comes to offering credit cards with travel rewards, cash back offers and other perks.

"The credit card industry," says Curtis Arnold, founder of, was "on a roller-coaster ride in 2010.

"The first of the year was filled with doom and gloom and there was a lot of talk about higher rates and fewer perks." As the year ended, however, people with good credit began getting attractive credit card offers in the mail, with banks going all out on rewards cards promotions in particular.

These days, "neither the CARD Act nor the credit crunch have killed the industry," says Arnold. "On the contrary, it seems that at least a few of the juicy card offers that consumers with good credit enjoyed a few years ago are back with a vengeance."

The abundance of tempting credit card offers available means you can pick and choose among the best deals being offered. It will also give you room to negotiate with credit card companies like never before.

They'll Forgive You at Least Once

Speaking of negotiating, have you ever been burned by one of those vexing $35 late fees when your payment failed to reach a credit card company on time? What most consumers don't know is that you can easily have this fee waived simply by calling your credit card company and asking for the charge to be removed from your monthly statement.

The key to a successful request is that you have to have a pretty good track record of paying your bills on time. If you missed four payments out of the past dozen that were due, you're not likely to find a sympathetic ear on the other end of the phone if you call your credit card company.

By contrast, if you have an excellent payment history, the vast majority of banks empower their customer service representatives to waive a late fee, usually once a year.

Let's say you were traveling and neglected to mail your payment before you left, or maybe you were simply busy with work, or thought your spouse had sent in your credit card bill. Whatever the case, if your failure to pay was a one-time mistake, your credit card company will likely overlook this transgression. But only if you ask.

To get the late fee removed, simply call your creditor, briefly explain yourself and ask: "Can you please remove the late fee from my statement?" Most representatives will reply by saying something like: "Yes, as a courtesy, we can do that for you this one time."

You Can Negotiate a Lot More Than You Might Think

Getting a late fee removed isn't the only thing you can accomplish when negotiating with your credit card company. When most people consider negotiations with a credit card company, they often picture themselves asking for a lower interest rate. While that's a good starting point, there are a host of other things you can also ask of your credit card issuer. Among them:

  • Change your payment due date (so that all your bills don't come due at once)
  • Upgrade your account from “past due” to "current" status
  • Remove a negative mark from your credit
  • Accept a partial payment in lieu of the total due
  • Waive a card's annual fee

Again, each of these requests will carry a lot more weight for if you are a good-paying customer. But there's no harm in asking for what you need even if your credit rating is less than perfect.

They Can Only Raise Your Rate for Six Months

If you've been dinged with a higher interest rate, perhaps because you were late in paying a past credit card bill, don't despair. That "penalty" or "default" interest rate doesn't have to last more than six months.

One provision of the CARD Act, is that there are limits on how long banks can hit you with so-called "default rates" after you've been late paying a bill.

Under the law, default rates can only be charged for six months, provided you pay your credit card bill on time during that period. After six months, your credit card issuer must restore your interest rate to its previous level.

Taking advantage of some of these tips can give you leverage in negotiating with your creditors. This can also help you to better manage your credit responsibly now, and for years to come. Give them a try.

Lynnette Khalfani-Cox, The Money Coach®, is a personal finance expert, television and radio personality, and a regular contributor to AARP. You can follow her on Twitter and on Facebook.

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