August 29, 2009 · 8:58 pm
Paying credit card fees is a lot like......
I read a lot of finance blogs and books. While there is plenty of advice out there I don’t believe, the most common piece of advice I just can’t swallow is the idea that if you get any sort of late fee/overdraft fee, etc.. on your credit card, you can have it erased by simply calling them and asking nicely for it to be removed. I bet I could also ask nicely for Brad Pitt to marry me, or the queen of England to give me 1 million bucks, or…. well, you get the picture.
My Rookie Mistake
Fast forward to this spring, when I overdrafted my credit card $21 and was hit with a $39 fee.
- WARNING: You should NEVER, EVER, EVER come anywhere near doing this! This not only lowers your credit score – which is based partly on how much of your available credit you use – but is a REALLY, REALLY stupid idea. I could give you a list of lame excuses as to why I did this but they are just that, LAME. Learn from my mistakes! OK, moving on…
Making the Call
It just so happens that at the time I was in the midst of Ramit Sethi’s new book, I Will Teach You To Be Rich, which includes not only advice on what fees you should ask to be waived, but also simulated phone conversations demonstrating what you should say.
Some advice when making the call:
- Be firm. (“I would like this fee removed” is more powerful than “Can you remove this fee?”)
- Be nice. You can be firm without being a jerk. Just be persistent.
- Remind them what a good customer you are (Ramit suggests the phrase, “I’ve been a customer here for 3 years and I’d hate to let one fee drive me away from your service”)
- If all else fails, ask if there’s a manager or someone else you can talk to
- Lastly, keep a record of the date you called, who you spoke with, and what was said/decided upon. Ask for the representative’s identification number and write it down.
With all of the above in mind, I sat down and called Capital One…. and shockingly it went largely like all these financial advice folks had been saying it would.
- I was firm but nice, agreed with them as they chastised me for making a mistake but stuck with my guns that I would like the fee removed nonetheless.
- I asked for a manager when the request was at first denied.
- The manager said he would “Look into it and call me back.”
- And… I got a check from Capital One refunding my $39 in the mail several weeks later! Not a bad use of 3 minutes of my time.
Taking it to the Next Step
Feeling cocky from my $39 success, I did some research into other things you can get simply by calling and asking for them.
Other things to request from credit card companies:
- Annual fees waived
- Late fees erased
- Lower APR (i.e. interest rate)
- Credit increase
- FYI: Just because you can flex your persuasive muscle to get these perks doesn’t mean you should use them. Even a very low APR doesn’t justify carrying a credit card balance, and erasing late fees doesn’t meaning that making late payments has no consequences.
Moral of the Story
Credit card companies stand to make big money off of you and will bend over backwards to keep you as a customer. Use this to your advantage.
P.S. Caveat to the Moral of the Story: Banks do not operate the same way.
Banks don’t make nearly enough money off the average Joe to justify erasing fees. If you get an overdraft fee at a bank and ask to have it removed they may actually laugh in your face (unless it was a computer error in which case they’ll do it). Don’t say I didn’t warn you.
What are your experiences with this? Have you ever called to have a fee removed? How’d it go? Leave a comment or email me at firstname.lastname@example.org and let me know.
March 31, 2009 · 11:12 pm
By now you’ve probably figured out that I’m completely in favor of 20somethings saving more money, (Compound interest anyone? Small amounts saved today -i.e. fewer meal at restaurants- turn into big amounts later on in life -i.e. more tropical vacations ). That said, there are good and bad ways of doing so. Here is my tribute to the 3 most common ways in which smart people do stupid things with the belief they are “saving” money……..
3. Ignoring Small Problems Until They’re Big Problems
- Health problems: While many health problems (an achy muscle, a weird pain) go away for free with some rest and relaxation, some pains (a painful tooth or an ignored cold that turns into a sinus infection) lead to larger expenditures down the line. You have to be the judge – if the potential cost (i.e. getting a tooth pulled) is much larger than the cost of catching it now (i.e. getting a check up), suck it up and fix it now.
- Financial problems: The same goes for financial problems. Cost of paying a financial consultant now to sit down with you and map out your financial future? Fairly small. Cost of 19% interest on $20,000 in credit card debt (not to mention the wear and tear of the anxiety that debt creates)? Huge. Same goes for taxes. As prices for tax prep services get more competitive, there is little reason not to take advantage of software of even a live professional to help you out if you’re tax clueless (for more information, check out my previous post “Beating the Tax Man in 4 Steps”). Doing your taxes right the 1st time is much, much cheaper than an audit.
2. Buying Things Because They’re Cheap or “On Sale”
- Extras of things you already own: You see your favorite (fill in item here – shirt, widget, pair of pants, electronic doohickey) on sale and you think “Well, I use the one I have all the time, couldn’t hurt to have another one. And it’s 50% off! What if mine breaks? What if the neighbor’s pet snake eats it?” and the item goes home with you. The problem is that the second of anything is rarely as exciting as the first, and by the time you break/lose/throw out an item there’s probably a newer, shinier version of it on the market you want instead. Resist buying things “just in case” and you’ll save yourself both time and money (remember that you’re paying not only the sticker price but also interest if you bought it on a credit card, the cost of a larger home or storage space to store extra items, and the lost opportunity cost of time spent cleaning your extra widgets that could be used traveling, hanging out with friends, or working).
- Food: Yes, Burger King Whoppers and Ramen noodles are cheap now, but they lower your productivity (ever tried to write a stellar paper after eating a package of Ho-Hos? Can anyone say “sugar crash”?) and can lead to more expensive health problems down the line (obesity, diabetes, high blood pressure to name a few). Full disclosure: I am the #1 culprit of this mistake (“but Beyond Beer Money, I’m skinny, I’m young, I exercise, I eat Ho-Hos and still write “A” papers”…) but even being the cookie monster that I am I’ve noticed a big difference after making simple changes. I’m not recommending you start buying everything from Whole Foods Market ($7 for strawberries? No thanks.) but shopping at cheap, healthy places like Trader Jo’s (my personal favorite) and making small substitutes (spinach leaves > iceberg lettuce, juice > soda, lean meats/fish like chicken and salmon > hamburgers) can make a huge difference. It’s hard to change the world while you’re pumped full of processed sugar.
And the #1 Way People Waste Money Believing They are “Saving” It?
1. Not Having Enough Health and/or Auto Insurance!
- Yes, paying lower premiums now feels great, and no, no one out there really needs all of the kinds of coverage insurance companies will try to sell you, but paying for a reasonable level of insurance now can help you avoid bankruptcy later. It can be confusing to figure out how much to get, but there are tons of good guides out there.
- For car insurance, check out Smart Money’s Guide to Auto Insurance which offers a full explanation in real English.
- For info on lower coverage health insurance plans for young people (such as temporary insurance and high deductible plans) I recommend starting here. Most companies offer some sort of health insurance option so go to HR and ask questions. You’d be surprised how much people miss out on great deals and benefits from the company they work for solely because they never asked.
If some readers feel they may notice a trend here, you’re right. Your health is your greatest asset. It allows you to work and to enjoy the fruits of your labor. When it’s in trouble, it can easily drain your assets dry. Protect it.
Other stupid money “savers” I’ve left out that you or “your friends” (i.e. you) commit?
Comment or email me at email@example.com