Trade credit insurance for small businesses launched

Towergate is offering trade credit cover aimed at small businesses and is letting them self-police customers over late payment
Cut price trade credit insurance designed specially for small businesses has been launched by a leading insurance broker.

The product costs almost half the typical annual premium and covers up to £350,000 of turnover from the risk that a customer becomes insolvent and cannot pay.

Towergate, run by entrepreneur Peter Cullum, estimates that up to one million small businesses could benefit.

The cover is underwritten by credit insurance giant Atradius and to start with will be available to all sectors apart from construction and clothing.

Gavin McClaren, Towergate's divisional director of credit, said: "At the moment a traditional credit insurance policy premium would start at £3,000 and go upwards, which for a small business is too high a cost. Normally that's allied with a high excess per claim of £500 to £1,000."

"Our product has a premium of £1,870 a year and an excess of £250. That opens a far larger part of the ledger to cover."

Towergate's policy tackles business concerns that credit insurers withdrew cover on a large customer during the recession without any notice or evidence of a change in payment behaviour with particular suppliers,

It is letting companies self-police their policies and cannot withdraw cover on a particular company without any direct evidence that there has been a change of payment behaviour affecting the policy holder directly.

Small businesses have to notify Towergate if a customer pays later than 30 days beyond agreed contract terms during the last six months or risk the cover being invalidated.

Mr McClaren said: "This is a big step for the insurance industry. They are giving up the monitoring to the policy holder. They have no control over what they are covering and what they are not."

The policy does not have any insurer approved credit limits but does come with a maximum liability of £20,000 a year and maximum individual claim of £10,000.

Mr McClaren said: "The impact of a bad debt on a small business can be massive. If you have a 10pc profit margin and sustain a £10,000 bad debt that means you would have to achieve another £100,000 of sales just to standstill."

Banks go to court to defy regulators over mis-selling of credit insurance

BRITAIN'S banks have picked a new fight with financial regulators in the hope of avoiding multi-million pound compensation claims following the mis-selling of credit insurance.

The British Bankers' Association announced on Friday that it was going to court to block new rules on the way compensation must be paid due to come into force in December.

It will ask the court to judicially review guidelines laid down by the FinADVERTISEMENTancial Services Authority (FSA).

However, the FSA immediately announced it will contest the bankers' action, and advised institutions to continue handling complaints as they have been ordered. The Financial Services Ombudsman, which can adjudicate disputes unresolved by the banks, said it would continue operating as normal.

Credit insurance, to protect against sickness or unemployment, is believed to have been widely mis-sold, via hidden charges on credit cards, personal loans and other debt.

Peter Vicary-Smith, chief executive of Which?, said: "The BBA's taxpayer-backed members should take a long, hard look at themselves and ask why they continue to wage this ridiculous war on consumers."

Elsewhere, it has emerged that more than half of all current accounts no longer pay interest, according to Moneyfacts.co.uk.

Current account customers typically receive just 0.77 per cent interest compared with an average rate of 1.43 per cent five years ago. A total of 55 per cent of current accounts pay zero interest to customers who are in credit. A further 28 per cent pay 0.1 per cent or less.

Rate stays at record low
THE Bank of England held UK interest rates at the record low of 0.5 per cent for the 19th consecutive month.

The bank also voted to hold the £200 billion quantitative easing programme at its current amount. Rates have remained fixed since March 2009.

Cut in tracker rate
BARCLAYS has cut its lifetime tracker mortgages by up to 0.41 per cent to celebrate mortgage lending hitting £100 billion. The new rates start at Bank of England base rate (currently 0.5 per cent) plus 2.08 per cent, giving a pay rate of 2.58 per cent, on life time tracker mortgages with a 30 per cent deposit and a £999 fee.

HSBC cut rates on all its 80 per cent loan-to-value mortgages by 0.4 per cent. All the products, which require only a 20 per cent deposit, have booking fees at £399 or less. The bank also introduced a two-year discounted mortgage at 2.79 per cent with a £99 fee.

Lloyds TSB Scotland launched its lowest ever three-year fixed-rate mortgage at 3.99 per cent. The product is available to first-time buyers, house purchasers and remortgagers with a 30 per cent deposit. The deal charges an £895 fee.

India's Regulator Suspends Sale of Credit Insurance

India's Insurance Regulatory and Development Authority has stopped the sale of credit insurance by nonlife insurers due to reports of malpractice and inadequate information for the selling of the products.

Nonlife insurers sell credit insurance to banks offering credit facilities to debtors. IRDA said "it is observed that such covers appear to be in the nature of credit default insurance," and such covers need a different regulatory treatment.

"After examining the credit default insurance contracts IRDA has come to the conclusion that the insurers are underwriting risks which do not have proper regulatory framework or sanction," said IRDA, in a statement.

The regulator has ordered all nonlife insurers to stop selling credit insurance until the authority develops detailed guidelines. IRDA said it will seek details of total credit risk exposure of companies and information provided with credit insurance policies issued by nonlife insurers to banks.

The sanction does not apply to Export Credit Guarantee Corp. of India Ltd., a government-owned company that provides export credit insurance support to Indian exporters.

Credit Life Insurance for Bad Credit Car Loans

Weighing the pros and cons of credit life insurance as part of a bad credit auto loan

Now what?

Once you’ve picked out a car and received the final approval for a bad credit car loan, there are a number of decisions you may still have to make. We know, because at Auto Credit Express we’ve been working with poor credit car buyers for over two decades.

Having seen the embarrassment and frustration that many customers with bad credit often face, we even created a web site to accept applications and match these people up with local dealers that specialize in customers with credit issues.

The alternative – buying a vehicle from a tote the note, we finance anyone car dealer – can be a problem because normally these dealers don’t report your payments to the credit bureaus. But even taking out a loan through a dealer with a legitimate national bad credit lender can end up badly simply by choosing the wrong kind of vehicle. Both situations can create problems and either one might even result in repossession.

The car loans with bad credit process can also be confusing, because in addition to the loan itself, the special finance manager who helped to arrange the loan is bound to offer you a number of “back end” products that you may never have heard of, one of which is bound to be credit life insurance.

Credit life insurance explained

Credit life insurance is a form of term life insurance. Term insurance refers to an insurance policy that, unlike whole life insurance, is in force for a fixed period of time and cannot be renewed. And, also unlike a whole life policy, a term insurance policy builds no cash value.

In addition to being a form of term insurance, credit life insurance is also considered to be a “decreasing” term policy. This means that the payout on the policy is designed to match whatever the loan balance happens to be at any point throughout the loan term. As the loan is paid off, the loan balance decreases and the amount of life insurance covering the loan balance also decreases to match the amount owed on the loan contract.

Buying credit life insurance

If you decide to buy credit life insurance, you usually have to do it at the time you sign the loan contract. The monthly insurance premium is based upon the original loan balance and the cost is added to the finance contract and becomes part of your monthly car payment. This means that because it is part of the finance contract and not paid in a lump sum, you will be paying interest on the life insurance premium as well as on the vehicle loan.

Is it worth the cost?

Whether or not it’s worth the cost is a decision that you’ll have to make. Here are a few of the facts:

Advantages:

1. Peace of mind – credit life insurance will pay off your car if you should die before the loan contract is paid off.
2. A single payment – the insurance payment becomes part of your monthly car payment, so there is no separate insurance premium you’ll need to pay.
3. If the loan is covered by credit life insurance, your estate won’t be responsible for the loan balance or loan payments if you die before the car is paid off.

Disadvantages:

1. Generally speaking, credit life insurance is usually more costly than if you were to take out a separate term life insurance policy for the loan amount.
2. In addition to paying insurance premium, you are also paying the interest expense on the balance of the policy cost every month.
3. If there is no co-signer on the loan and you are single, even if the loan isn’t paid off before you die your family is not legally responsible for the loan balance.

As we see it

The decision to carry credit life insurance on your loan contract is one that you will have to make. If you have a family or a co-signer and you’re worried that they might not be able to make payments on your car if you die, you might want to first look at the costs of a term life policy before you sign on the dotted line making credit life insurance a part of your car loan.

At Auto Credit Express we have helped thousands of people with bad credit buy cars and reestablish their credit at the same time. Our nationwide network of affiliate dealers specializes in bad credit car loans. Unlike other sites, our toll free number is listed on every page in case you have any additional questions.

So why not begin the process right now by filling out our secure online bad credit car loan application to see what we can do for you.

Export credit insurer focuses on mining

CAPE TOWN — The Export Credit Insurance Corporation of SA is becoming more exposed to the mining industry as South African mining companies seek out investment and trade opportunities in the rest of the world, and particularly Africa.

The agency, which falls under the Department of Trade and Industry, was established in 2001 to provide export credit insurance for export transactions and to provide political risk insurance for outward investments from SA.

In the company’s annual report tabled in Parliament yesterday, CEO Patrick Kohlo said the planned projects are concentrated in the mining sector, constituting 45,6% of those approved by the board.

Infrastructure, at 19,5%, is second to mining, with the agro- industry (9,3%), accommodation and catering (7,1%) and other sectors making up 18,5% of all projects approved. Results tabled by the agency have also confirmed the big hit that trade suffered during the global financial crisis last year.

Its chairman, Tladi Ditshego, said that corresponding with the downturn in underwriting activity brought about by the international crisis, gross premium income for this financial year dropped to R156,9m.

That compares with the R170,3m recorded in the previous financial year.

The company plans to focus its efforts on offering its products to small, medium and micro enterprises by actively promoting supplier and buyer credit products for small or medium transactions with quicker turnaround times in the approval process.

The agency has also sought to aggressively pursue opportunities that are beginning to arise as a result of Africa’s burgeoning trade with the rest of the world, in particular China.

Trade credit rates fall as capacity grows

New insurance capacity, increased insurer competition and improved risk management have led to positive developments for buyers of trade credit insurance across most of Europe, according to Marsh.
The broker’s latest data for 2010 suggests trade credit insurance rates are reducing in France, Germany, Italy and the UK.

Meanwhile, rates are stable or experiencing minimal increases in Belgium, Denmark and The Netherlands; and localised increases are being recorded in Greece, Portugal and Spain. Trade credit cover is also becoming easier to procure, with insurers no longer taking industry sector-wide underwriting decisions.

Tim Smith, Leader of Marsh’s trade credit practice in Europe, the Middle East and Africa, commented: “The trade credit insurance market has been transformed in 2010 with rates falling or stabilising in most key European markets. Following the recession and the widespread cancellation of cover in certain high-risk industry sectors, insurers are now writing more business and deciding cover on a company-by-company basis.

“As insurers have developed more sophisticated risk assessment techniques, so companies are more willing to share financial information and formalise their business order policies. This both aids insurance procurement and helps companies obtain better terms.

“Demand for trade credit insurance remains strong. Entry to the market by insurers new to the sector has increased capacity and competition for business among trade credit insurers. For companies seeking trade credit insurance, the outlook for the remainder of the year and into 2011 is very encouraging, especially for organisations with strong credit management procedures. “

China Short-term Export Credit Insurance Hit $100B

September 17 -- China Export and Credit Insurance Corporation’s (CECIC) short-term export credit insurance premiums leapt 107.2 percent year-on-year to $104.39 billion as of September 15, reports China Securities Journal.

CECIC provided short-term export credit insurance for $42.3 billion worth of exports from China to emerging economies in the first eight months of 2010, up 91.2 percent year-on-year.

As of September 14, CECIC generated insurance premiums of $126.93 billion, 1.1 times the insurance premiums for 2009, of which export credit insurance premiums jumped 113.6 percent year-on-year to $110.19 billion.

Shares of Ping An Insurance (Group) of China (601318, 2318.HK) dropped 0.35 percent to close at 48.76 yuan today.

How credit insurance can help your company

Credit insurance covers the policyholder's interests in the event of a borrower's insolvency or dishonesty (deliberate non-payment) and the potential loss the creditor may suffer. These are universally known as payment protection insurance or credit default insurance.

After the contract stated risk occurs, the insurer shall undertake the contract of insurance premium to compensate its insured losses, according to the agreed amount of damages. The term credit is derived from the elements between the supply of goods from one company to another or the provision of a service and payment for a given period of time (usually 30-180 days).

The commercial risks primarily include the buyer's insolvency (bankruptcy). In addition, significant risk factors are changes in the foreign exchange transactions as well as others that have a negative impact on commercial relations.

The political risk factors include political unrest, massive strikes, a coup d'etat, not covered by government action to declare a ban (an embargo) or suspensions on exports, imports, and other commercial activities.

Any company that delivers a product or provide a service on account, must protect itself against the risk of unpaid claims. And these are capable of causing liquidity constraints, which depending on the level of outstanding debt can rapidly lead to financial problems of a company. The credit does not only claim compensation for a loss, but also the credit rating of declining business at home and abroad.

In credit insurance, the forms trade credit, are secured by receivables from goods and services, and capital goods credit insurance vary. Political risks can be secured through export credit guarantees.

For the broader sphere of credit insurance among consumers, differs only to banks, for example, in hedging against MRP or installment loans from individuals.

It has in times of increasing unemployment, an implication due to the corresponding increase in judicial decisions in this segment. In this extended environment, the deposit insurance settles, which is similar to a bank guarantee.

Credit insurance was launched for the purposes of issuing specialized insurance. The objective was to combine the product lines of business credit insurance, surety insurance and fidelity insurance, which were previously offered occasionally by large insurance companies, to companies to provide competent protection against liquidity shortages.

Consumer credit insurance is a means for consumers to cover the liquidation of loans, such that even if the debtor passes away, incapacitated, or loses a job, the debt can still be repaid.

Lebanon ranked third among 12 Arab countries in the value of overall export credit insurance

BEIRUT: Figures issued by the Arab Investment and Export Credit Guarantee Corporation (Dhaman) indicate that Lebanon ranked third among 12 Arab countries in the value of overall export credit insurance contracts signed in 2009, as reported by Byblos Bank’s Lebanon This Week.

Dhaman provides insurance coverage to Arab and non-Arab investments in its member countries against non-commercial risks, as well as insurance against commercial and non-commercial risks for inter-Arab and worldwide export credits.

As an exporter, Lebanon signed $77 million worth of export credit insurance contracts in 2009, accounting for 13 percent of the total value of such contracts. Lebanon signed $85.9 million or 13.7 percent of the total value in 2008.

Lebanon ranked ahead of Kuwait with $50.3 million (8.5 percent), Bahrain on $27.5 million (4.7 percent), Egypt with $24.8 million (4.2 percent), Syria with $24.4 million (4.1 percent), Sudan with $10.5 million (1.8 percent), the UAE with $9.4 million (1.6 percent), Oman with $4 million (0.7 percent), Jordan with $3.1 million (0.5 percent) and Algeria with $1.8 million (0.3 percent). It came behind Saudi Arabia, which accounted for $247.2 million, 42 percent of the total and Tunisia with $109.6 million (18.6 percent). Lebanon did not sign any investment insurance contracts with Dhaman last year as an exported FDI.

In parallel, Lebanon ranked in 13th place among 17 Arab importing countries with $5 million worth of export credit insurance contracts signed in 2009, representing 0.85 percent of the total value of such contracts. Lebanon ranked in 8th place with $16.8 million worth of such contracts signed in 2008.

Know your new rights in the great credit card clampdown

Thousands of people whose credit card rates are increased suddenly were promised new rights last week, though critics said it would do little to stop the practice.

The government announced plans to clamp down on the industry to make it fairer and more transparent. The proposals, announced by the Department for Business, Innovation and Skills (BIS), outlined five rights that, it claims, could save consumers £300m a year.

They include the right to pay off the most expensive debt first when there has been a balance transfer, more time to reject increased rates, and better access to information.

Sunday Times readers have complained that their credit card rates have risen recently — in some cases by as much as seven percentage points.

Egg, part of Citibank, Halifax, Capital One and Virgin Money have all increased rates for some customers this month.

James Taylor, 54, who runs an advertising agency in Reading, received a letter from Capital One saying he would have to accept a seven percentage point increase in his purchase rate to 27.9% or stop making new purchases on the card.

He said: “It’s like being in a restaurant and finding out that the meal that would have cost you £10 will now cost £20. I felt I was being held hostage.”

He has declined Capital One’s higher rate and switched to another provider.

Capital One said: “We must adjust rates to account appropriately for the increased risk of lending to consumers in an economic downturn.”

The government’s new rules will not ban the practice but will increase the amount of notice card firms must give from 30 to 60 days.

David Black of Defaqto, the data firm, said: “The new rules will offer a comfort blanket to consumers but if you have already had your rates increased, these measures will offer little protection. The best you can do is to switch to another card with a 0% introductory rate on balance transfers.”

However, Virgin Money last week cut its 0% offer from 16 months to 14 months, leaving the Barclaycard Platinum at the top of the best-buy tables with 15 months interest free.

It is hoped the new credit card rules will be in place by the end of the year. However, two providers have indicated they will not be able to introduce higher minimum repayments this year because of “technical difficulties”, BIS said.

Here we assess the new rights:

1 RIGHT TO REPAY QUICKER

One of the main benefits for consumers is the drive towards a “positive order of repayments”, where the most expensive debt is paid off first. Today, almost 80% of cards pay off the cheapest debt first, said Defaqto.

Say you transferred £2,000 to a card offering 0% on balance transfers for 12 months but charged 18.9% on purchases from day one. Say you also made £2,000 of purchases and paid back £190 a month.

With a negative order of repayments (where the cheapest debt is paid off first), you would pay a total of £410 in interest in the first year and still be left with a balance of £2,130 to repay, said Moneynet, the comparison site.

If the payments were going to the most expensive debt first, you would pay £187 in interest. The £2,000 on purchases would have been repaid, assuming you made no other purchase during the year and you would be left with the £2,000 on the balance transfer to pay off.

There are only two providers that now offer a positive order of repayments — Nationwide and Saga — the latter provides services only to the over-fifties.

Black suggests having two cards if you want to take advantage of balance transfer introductory offers and 0% on purchases. For balance transfers he suggests the Barclaycard Platinum, which offers 15 months at 0%. There is a 2.9% fee and its free purchase period lasts only three months. For purchases, you would be better off with a Tesco Clubcard, which has 12 months interest-free on purchases.

If you would rather have one card, consider the AA credit card, which offers 0% on balance transfers and purchases until November 2010.

Another measure is to force customers to pay off at least 1% of the debt on top of interest and other charges, to ensure they pay off the balance faster.

2 RIGHT TO REJECT RATE RISES

Customers will also be given 60 days’ notice that their interest rates will increase rather than the 30 days that providers offer today. However, they will still have to stop using the card if the new rate is rejected but can pay off the debt at the old rate.

Customers can also reject automatic credit limit increases and providers will be banned from increasing limits for those at risk of falling into financial trouble. And customers will be able to ask for a reduction in credit limits online rather than through customer services.

3 RIGHT TO CHECK YOUR CREDIT FILE ONLINE

Consumers will have better access to the credit files used by providers to determine how risky a customer is. You can already access your file for £2 from Call Credit, Equifax and Experian, but these are sent by post. BIS wants reports available online. Equifax already offers this service, while the other two have until June to comply.

Consumers will also be given more information about the way they use their cards. A minimum payments warning will be sent, for example, highlighting the overall cost of paying only the minimum each month. An annual credit card statement will also be issued allowing you to compare your spending and interest charges from one year to the next.

Greece Concerns Surface in Currency Markets

While European stock markets are taking recent jitters about European support for Greece in stride, concerns are bubbling up in the foreign-exchange and credit markets. The euro is down 0.3% against the U.S. dollar to $1.3578, after falling about 1% yesterday from a height of $1.3740 and briefly crossing beneath the $1.35 level. The last time Europe’s common currency ended a New York trading session below $1.35 was May 2009.

Meanwhile, traders in the credit-default swaps market are again bidding up the price of government debt insurance as uncertainty mounts over the nature of any Greek financial-rescue plan. The cost of insuring against a Greek government debt default for five years is now about $322,000 a year compared with $316,000 yesterday and below $300,000 earlier this week, according to data provider CMA DataVision. (Greece insurance costs are still below the $350,000 to $425,000 range they occupied throughout February when Greece debt woes were center stage.) Credit insurance costs for Portugal and Spain are also slightly higher.

The reason for the ruckus: With German officials now seeming to change gears and be more open to involvement by the International Monetary Fund in any emergency Greece rescue plan, investors and analysts are worried about the impact on the broader euro-zone. IMF involvement could, like some European countries fear, be a major embarrassment that weakens the long-term credibility of the euro. Still, it may be premature to be too bearish: While the euro isn’t out of the woods yet, the end-game for Greece could be in the wings.

“The sudden German turn-around caught markets off guard,” analysts at Italian bank UniCredit say. They add, however, that “we think the short-term risks are limited, as financial support will most likely be pledged soon by either the (European Union) or the IMF.” Next week’s European Union summit could therefore be pivotal.

Bad credit can mean higher insurance premiums

policyholders are well aware a hurricane is guaranteed to hike insurance rates, but fewer realize their credit reports also are factored into homeowner and automobile insurance premiums.

Consumers who have suffered financial setbacks because of the economy are seeing higher homeowner and auto insurance premiums, but the mistakes often found in credit reports also can lead to rate hikes.

Even Mississippi Insurance Commissioner Mike Chaney said that he recently faced a 10 percent increase in his Safeco auto insurance rate because of an error on the insurer’s part.

He said his rate was corrected when he questioned the charge, based on his credit history.

“The bottom line was, when we got down to it, they had rated me a credit risk because the agent had checked that I was eligible to pay on installment,” said Chaney, who pays his premiums in a lump sum. “My credit history is very good because I have a thin credit file, very little credit.”

Insurance companies contend consumers with bad credit tend to file more property insurance claims. Consumer advocates question the accuracy of studies that find a correlation between credit and risk. They also argue the industry should stick with more relevant risk indicators, such as claims history and the condition of property being insured.

The debate is attracting more attention as a bad economy affects consumer credit and also has consumers scrutinizing their expenses.

Chaney sides with consumer advocates who believe insurance companies use credit histories to cherry pick customers and charge higher premiums. The commissioner said credit information in some cases allows insurance companies to raise premiums without a state-approved rate increase.

“It’s a serious game for them,” Chaney said. “It’s always about money.”

Insurers defend their use of credit reports to develop insurance scores, which dates to the mid-1990s.

They cite a 2007 Federal Trade Commission study that found credit-based insurance scores do predict risk for automobile policies. Studies sponsored by insurance companies, and the state of Texas, have reached similar conclusions.

Insurance companies point out that customers with good credit are rewarded with lower premiums. They view rates partly based on credit as an equitable way to set premiums.

“If you’re conservative with your finances, you manage your finances and credit well, typically, you’re also going to be an individual who is less likely to be involved in an accident,” said Robert Hartwig, who heads the industry’s nonprofit Insurance Information Institute. “You’re going to be someone who is more likely to obey speed limits. You’re going to be someone who is less likely to drive impaired. You’re going to be less likely to be someone who fails to perform maintenance on your car.

Scale of China's export credit insurance and guarantee up over 80%

China Exports & Credit Insurance Corporation (Sinosure) completed 11.66 billion U.S. dollars worth of insurance and guarantee business in 2009 amid a severe international trade situation, an increase of 85.8 percent year-on-year.

Of them, short-term export credit insurance policies amounted to 90.27 billion U.S. dollars, representing 2.2 times that in 2008, and not only meeting but exceeding the target of 84 billion U.S. dollars set in national policies ahead of schedule.

In 2009, the proportion of exports covered by export credit insurance to total exports rose significantly, with the export credit insurance coverage on the general export trade reaching 18.6 percent, 12.1 percentage points higher than that of 2008.

The support given to exports by major industries or exports to emerging markets has achieved new progress, helping enterprises export 49.15 billion U.S. dollars of goods to emerging markets such as Africa, Latin America and Central and Eastern Europe, up 114.1 percent year-on-year.

The results of the support to help enterprises seize orders and maintain market shares are emerging. Regarding the problems that "enterprises were afraid to receive orders," Sinosure issued more short-term export credit insurance policies, with the amount of 30-day or longer export credit insurance policies rising by 144.9 percent in 2009. Regarding the problems that "enterprises lack the financial capacities to receive orders," Sinosure actively issued export credit insurance policies to help enterprises secure trade financing totaling more than 160 billion yuan.

EU Approves Austrian Short-Term Export Credit Insurance Plan

BRUSSELS (Dow Jones)--The European Commission Thursday cleared the Austrian government to provide export credit insurance to help countries unable to find coverage from private sources.

The government scheme, which is cleared to run until the end of 2010, is designed to help Austrian exporters cope with the fallout from the financial crisis.

The commission, the European Union's regulatory arm, has cleared similar measures for other countries in the bloc.

Call Your Lender and Strike a Deal

Got credit card debt? Relief might be just one phone call away.

This money-saving strategy is pretty straightforward: Call your credit card company and sweet-talk the customer service rep into lowering your interest rate. (Don't worry, we'll tell you how to play your cards right during your call in a moment.)

What's a few squirmy minutes on the horn worth in cold, hard cash savings? Plenty: On a $6,000 balance, at a 19% APR that you want to pay off in one year, negotiating a rate reduction to 12% will save you $198 in interest. (Monkey with this debt reduction planner calculator to see what it's worth on your own balance.)

Dealing with the new lending reality
Clearly, anyone who carries a balance on their credit card should start dialing for dollars right now. However, unlike the good ol' days of credit card debt (yes, there were some good things about unabashed competition and rate wars), this strategy isn't the slam-dunk that it used to be.

A survey several years ago found that more than half of people who asked were able to lower their interest rate by more than one-third. I don't know what the success rate is today, but anecdotal evidence suggests that as lenders have tightened their standards and reduced their exposure to consumers' indebtedness, they are more willing to lose your business to a competitor than in the past.

So what's a gal with a credit card balance to do? Give it the old college try, that's what.

Will this work for you?
Talking your credit card company into lowering the interest rate on your account has more hurdles than yesterday's dialing-for-dollars exercise to get a break on your cable TV bill.

The customers most successful at getting a break generally have these things going for them:

A stellar on-time payment history. If you've been late paying your bill (or have skipped a month or so altogether) in the past six to 12 months, your bank probably won't be as amenable to negotiations.
A relatively blemish-free credit reputation. Lenders are constantly checking your credit file to see how you're handling your other debts. So if you've been a disaster customer with another card company or have outstanding collections marring your credit file, you don't have a lot going for you when you make that call.
A long-standing relationship with your lender. Being a longtime customer can work in your favor. Being a longtime customer who regularly carries a balance (thanks for the interest payments!), uses your card frequently (thanks for the transaction fees!), or takes the bait for special offers (thanks for signing up for our overpriced credit insurance!), you are considered a "good" (aka "profitable") customer and one worthy of keeping on your lender's books.
Have a handful of competitors' offers to refer to during your call. Credit card competition has ramped up in recent years, as card companies like JPMorgan Chase (NYSE: JPM) and American Express (NYSE: AXP) now must contend with retailers such as Target (NYSE: TGT) and Home Depot (NYSE: HD) offering their own branded credit cards. (We'll show you where to find competitors' rates in a second.)
So if you have a relatively blemish-free credit record, you've been a longtime customer, and you have the patience to work your way up the phone tree (or call back multiple times until you get a bank representative who will play ball), the deck is stacked in your favor.

How much of a break should you request?
If you don't already have the details of your debt, use the "Get to Know Your Debt" worksheet (.pdf file) to track how much you owe, to whom, at what interest rate, and when it will be paid off.

Next, you want to see what your bank's competitors are offering. LowCards.com, IndexCreditCards.com, and Cardhub.com are a few places to do some research, and you'll find information both on traditional bank cards like Citigroup (NYSE: C), Capital One (NYSE: COF), and Discover Financial (NYSE: DFS) as well as retailer-specific cards.

Keep in mind that low, low rates that many issuers offer typically expire after an introductory period. If you can pay off your balance during that time frame, ask your lender to institute a low rate like that for a fixed period. If it's going to take you longer to pay off your balance, shoot for a more realistic ongoing rate reduction.

Start dialing!
Now that you're armed with information about your current debt, and you know what kinds of deals are out there, psych up to make that important phone call.

Feeling tongue-tied? Use our sample debt negotiation script to guide your conversation to its fruitful end. If you need more moral support, call in the reinforcements! Tap into the collective wisdom of the longtime Fools who frequent our active Credit Cards and Consumer Debt discussion board. Check out the helpful FAQ, too.

If it doesn't work ...
Keep trying. If you don't get what you want the first time, try to get another customer service rep or supervisor on the line. Still won't budge? Mark your calendar and call back in a few months.

More ways to save ...
Here are two other money-saving strategies you can employ:

1. Move your balances to your lowest-rate card. Simply call your lender and ask how to transfer funds. And be sure to find out what fees -- if any -- you'll be charged. (If you're maxed out on those cards, then forget it.) Weigh those against any interest savings before making the move.

2. Sign up for a new card with a low balance-transfer deal. The websites mentioned above keep a list of current balance-transfer deals. One very important thing to note before opening a new card and moving what you owe onto it: The balance-transfer strategy is rife with "gotchas" that can wipe out any savings. Read -- no, memorize -- "How to Win the Balance-Transfer Game" before you do it so you can avoid the land mines.