Negotiating credit card rates?

Question: do you think paying for a service to lower interest rates on credit cards can work? AFL Financial Services charged 990.00 to negotiate with my credit card companies, to lower interest rates. I have personally been able to negotiate with the companies in the past but now they aren't working with me. thank you karen, Seneca Falls, NY

Answer: More and more people are falling behind on their debts, thanks to the twin pincers of a financial crisis and a deep recession. That said, I'm not a fan of paying big fees to any outfit to renegotiate consumer credit card charges.

Here's a checklist for anyone carrying too much debt and looking for help. (My assumption with this list is that the debt burden has created a financially precarious situation calling for strong remedial action.):

First, check out a branch of the National Foundation for Credit Counseling (NFCC). It was founded in 1951, and it's the biggest and oldest national nonprofit credit counseling service. The website is www.nfcc.org and the toll free number is 1-800-388-2227. For example, I looked at the branch nearest you, which is in Syracuse. It offers Internet, phone and in-person counseling and the fees range from zero to $30. Low fees matter. You're already cash-strapped.

Second, for anyone that can't see their way out of debt (and it seems to me from your email that isn't you) consult with a bankruptcy attorney. Sometimes bankruptcy is the best path toward getting a fresh financial start. Sometimes it isn't. But you should be able to make an informed decision. A good source of unbiased information on bankruptcy and other avenues for getting out of debt is www.nolo.com.

Third, don't give up yet on renegotiating rates with lenders. Right now, it appears that your experience is fairly typical. But there is growing pressure on financial institutions benefitting from a taxpayer bailout to work with customers rather than take a tough stance. I'd get back in touch with your creditors in the New Year.

Last, whatever you do to get out from under your debts, congratulations. But the real trick is to make sure you stay out of debt. Create a plan--and stick to it..

About the author

Chris Farrell is the economics editor of Marketplace Money.

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