D6 - One Tiny Change That's Saving Us Thousands

Imagine if there was a way to instantly (well, almost instantly) save a significant amount of money with one small change. For us, there was.

High-interest debt can feel like trying to fill a bucket with holes. No matter how much you repay, the interest keeps stacking up. But here’s the good news:

👉 You might be able to reduce your interest rate - just by asking.

Small changes to your debt situation can make big differences

Why Would a Lender Agree?

Ultimately, credit providers (like banks) are businesses. While their goal is to earn interest, they also want to avoid defaults - in other words, you not paying them back. If you have a good payment history, like we do, many lenders would likely prefer to reduce your interest rate rather than risk losing everything through a default or even sequestration.

(We discussed sequestration in our previous blog post here).

Secondly, banks rely heavily on the interest you pay them - It probably is one of their primary sources of income. If you were to get a loan from another bank for the same amount (or more) at a lower interest rate, your current bank knows you might use that loan to settle your debt and possibly close your account. This would mean losing out on a significant amount of future income - the interest you would have continued to pay.

In fact, many South Africans may not realise that they can negotiate with credit providers.

The Email We Sent

Here’s the actual email we sent to one of our credit card providers:

Hi, [Name],

I trust you are doing well. 

I was hoping you could please assist me with a couple of things:

1. The interest rate being charged on my debit balance on my credit card is currently 22.25%. Given that I have been such a loyal client of XXX Bank for more than 30 years, please advise what the best favourable interest rate is that XXX Bank can offer me?

2. The same applies to my overdraft interest which currently stands at 14.25%. Please advise what your best offer is. 

 Thank you in advance. 

Their Response

Dear Joe

Thank you for the mail and I am doing well thank you.

Hope you are well too.

I can send through a request for rate concession on your Credit Card , please note sending out a concession it doesn’t guarantee that it will be changed.

What rate do you have in mind on a Credit Card?

When I look at the Overdraft rate you are appropriately priced @ prime+2.5, this is good rate. Please note when you increase the overdraft the same rate is not guaranteed.

Please advise when do you need assistance to increase Overdraft or Credit Card?

Regards

What followed :

• We replied by saying "we would like the interest rate to be not higher than 17.25% which is in line with the interest rate another bank was charging us on our credit card with them". This was the truth. But do you spot the subtle hint....

• They responded by saying that "I have requested the concession and expecting feedback".

  
  

 And then the next email from them a couple of days later was this :

Feedback received and your credit card concession was approved to the requested rate of 17.25. effective immediately.

Please check on the next statement for rate amended.

The overdraft is correctly priced.

Hope the above information is in order.

Regards

The Savings

We owe R60,000 on that credit card. Reducing the interest rate from 22.25% to 17.25% saves us 5% per year.

Let’s do the math:

• 5% of R60,000 = R3,000 saved in interest annually

• Over 3 years = R9,000 saved

  
  

That’s money we’d have paid for nothing in return - just interest!

Pro Tips for Success

• Stay calm and polite – even if you’re frustrated.

• Be realistic – don’t demand an unreasonably low rate.

• Be proactive – if you're already behind, don't wait for collections to come knocking.

• Track your request – keep all communication for reference.

What If They Say No?

They might. But:

• Some may offer a temporary rate reduction

• Others may refer you to their “hardship team”

• You can repeat the request in 3 - 6 months after improving your payment track record

  
  

If they say no and you’re still in financial trouble, consider speaking to a registered debt counsellor (debt review) who can negotiate on your behalf and possibly include the account in a restructured plan. We've posted all about debt review in a previous post here.

Conclusion

As the saying goes, "every problem has a solution". It's not always just "doom and gloom". Hacking away at our debt one month at a time and implementing small strategies that makes our debt situation a bit better is what's going to pull us through and on our path to financial independence.

What's Next

Ok, so we've side-tracked enough now. We really need to get back on track. What we really need to do is figure out what surplus (if any) we have to play with - to pump, as an extra payment, into our debt thereby crushing it as quickly as possible. Click here to go to our next debt where we are doing exactly that -

Until next time, take (financial) care!

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