Want to Pay Less? Just Ask

Debt is a real problem for a lot of people in our country. Whether it’s a credit card balance or mortgage loan, getting in over your head when it comes to owing money can feel like a hopeless situation. It doesn’t have to be, however, if you employ some tried and true debt reduction strategies, one of which is the easiest and least expensive options: Asking.

First Step in Debt Reduction Plan: Ask Lender for Help

When you borrow money from a creditor or lender, you are granted that money in exchange for your promise of paying it back (along with interest, of course). A lender never has to accept anything less than what you owe them, and there’s no way to force someone into reducing or dismissing your debt. That doesn’t mean it can’t happen, though.

Most lenders would rather get something from you if you’re struggling to pay back your debt, rather than nothing at all if you end up filing bankruptcy. That’s why it’s often much easier to work directly with the person or company you owe money than you might think.

So if you need help with debt reduction, don’t go straight to a debt relief agency. Often, they’ll charge you an arm and a leg to do what you can do on your own. It may or may not work, but the first thing you should do when you find yourself struggling with debt is ask to have it reduced.

Prevent Credit Card Debt by Asking for a Hardship Program

When credit card debt gets out of hand, it’s often due to a high interest rate. It’s very hard to pay down a balance when your payments are only covering a portion of the interest owed and not even any of the principal. One of the things you can do to deal with credit card debt problems is call up the creditor and ask to have your rate lowered.

This is a tactic used by many (regardless of whether or not they had debt problems) that used to work more often before the recession. Now it’s a bit harder to pull off, but it doesn’t hurt to try–especially if you are just barely making the minimum payments. Just don’t threaten to close your account in case your creditor says no, in which case you’ll have to follow through or possibly experience an adjustment to your terms you might not like.

Instead, ask if your bank or credit card issuer can work out a hardship program with you, which can offer a lower interest rate or debt forgiveness for a certain period of time while you get back on your feet.

Ask Your Mortgage Lender for Principal Reduction

Like a credit card, you can also ask your mortgage lender to reduce your home loan interest rate if you’re having trouble making payments, but another option that is more common these days is to ask for a principal reduction instead. Again, this isn’t something that occurs often, but it is possible to convince your mortgage lender to reduce the amount of principal you owe on your loan if you’re falling behind on payments or are underwater.

Most major mortgage lenders offer some type of principal reduction program, including Bank of America and Wells Fargo. This means rather than reducing your interest rate or allowing you to skip a few payments, the lender will cut the total amount you owe them. It’s often the preferred way to handle an underwater mortgage because it encourages the borrower to keep making payments and if property values increase, the homeowner can actually profit when it’s time to sell.

These are just two instances where simply asking for a break can result in owing less. But if you’re confident in your request, you can apply this strategy to more that just debt reduction–if you think you deserve to pay less for something, ask!