This is a guest post from Daiko, who previously shared how to feed yourself on $15 a week.
Asking questions can be a powerful tool for developing financial resilience. Two weeks ago, for example, I received an overdraft charge from my bank. My first reaction was to curse and pound my head against the desk, but after taking a deep breath I thought: “Why not ask them to remove the charge?”
I called the bank, asked nicely, and they agreed to refund the charge as a courtesy. I spent fifteen minutes (because I had to call back after the charge had cleared) and netted $25, for an excellent pay rate of $100 per hour. I don't know about you, but that $100 per hour is a lot more than I earn at my job.
I've found that asking for special treatment often yields surprising results and can pave the way to better personal finance. Here are ten ways to put this idea to work:
- Ask to have fees waived
My overdraft example fits this category, but the fee doesn't have to be a penalty. Years ago I got tired of paying a $20 annual fee to my credit card company, so I called and asked them to stop charging me. I haven't paid an annual credit card fee since. (In fact, no-fee credit cards have become standard since then.) This strategy can also be employed on monthly bank fees, registration fees, membership fees, and so on. Asking has no consequence worse than “no”. And you'll be surprised how often the answer is “yes”.
- Ask for a rate reduction
This applies to credit card interest rates, monthly telephone fees, newspaper subscription rates, and more. J.D. wrote about this one in his post Save Money by Asking for a Lower Rate and again in his post on The Reduction Quest. This is also good advice for hotel rooms and rental cars, two industries that almost always discount when you ask for it. The trick is to ask politely for the best rate, or for special membership rates (for example, American Automobile Association). I read recently that a Kiplinger's survey found that hotels and car rental companies reduced prices for 7 of every 10 people that asked.
- Ask for a rate increase
This is the opposite of the above. Often, you'll be able to increase your yield simply by asking at the bank. This may require meeting some special requirements or changing account types (from money market to savings, for example) but I've asked three times in the last three years, and in all cases achieved a better return. Which brings me to my next suggestion:
- Ask for an exception
Three or four years ago, I decided to ask my bank for a better interest rate. At the time, I was earning less than 1% a year — a pitiful return. I did a little research online and found I could get as high as 4.25% and headed down to my local bank. The customer service representative said he could give me a promotional rate if I had a certain type of account, but it required a minimum balance and would charge fees unless I had significantly more money in the bank. I asked for an exception. After some negotiation, he granted me the rate and waived the fees for the time I would need to save the additional money (four months).
There's probably no end to the number of exceptions you can ask for: just pick a rule and ask for it to be waived. (This obviously works better the more financial leverage you have).
- Ask for alternatives
This is one I've employed on both homeowners and auto insurance policies: just last week I called my homeowners insurance company and walked through the policy rider by rider. By correcting the value on my house (which was too high), removing an unneeded rider, and increasing my deductible (because I can now afford a higher one) I was able to net $345 in less than an hour. They sent me a refund check this week.
- Ask for a raise
It is very hard to ask for a raise, but properly prepared you can net thousands of dollars for doing so. My brother asks for a raise every year and backs it up with statements of his accomplishment during the previous year. In every case, he has received 10% or better on his salary, yielding thousands a year that he would otherwise never receive. On the one occasion when I followed my own advice, I actually achieved a $12,000 increase. It was astounding.
- Ask for a discount
Prices are negotiable, apparently even in major department stores and retail chains. This is another question I don't use often, but my brother makes a habit of asking for 3-5% off every major purchase he makes. Sometimes the answer is “no”, but he gets a “yes” often enough that he jokes about getting his “special price”.
- Ask for the sale price
This is similar to the previous point, but has much more emotional leverage. For some reason, it is easier to ask for a sale price that was advertised last week or at a competing store than to just ask for a discount. Be prepared when you use this one, and bring the flyer with the sale price. In most cases you will get it. There is a well-written book about this type of asking (and more) called Ask!: The Revolutionary New Guide for Getting Total Customer Satisfaction.
- Ask for a short sale
If you're selling your house in a market where prices have declined, it may be possible to have your bank absorb the difference between the sale price and the existing mortgage. Usually this is reserved for people with severe financial hardship, but if you are in a depressed market and have to sell short to get out of the loan without defaulting, be sure to ask your mortgage holder for a short sale. Be aware that the federal government considers the “short” amount to be income, and you will owe taxes on it at the end of the year.
- Ask for quotes
Asking for quotes is always a good idea when purchasing a big ticket item, and it can make the purchase of a car much easier by eliminating much of the barter period. While I was working on this article, I stumbled upon a book called Instant Weddings that advises that you to ask for quotes on your Wedding services out of context. There's no reason why the vendor needs to know you are shopping for your wedding, and by leaving out the word “Wedding” during your inquiries, you often avoid the wedding “tax” and save thousands of extra dollars.
Here's how it works: Instead of asking for a quote on a wedding dress, ask for a quote on a party dress. Instead of asking for quotes on a wedding dinner, ask for quotes on food for a private party. This is not the first time I've heard this advice, but I've never had the chance to use it. Have any of you used the strategy successfully?
If you're looking for more reading about asking for a better financial future, here are a few links to articles online (including those linked within the rest of the post):
- Save Money by Asking For a Lower Rate
- A Simple Question to Save Money
- Something You Should Know: Interview with Barbara Rollin
- Reduction Quest: The How to Save Money Game
- Alpha Consumer: Asking for a Lower Credit Card Rate
- Here's How I Negotiated out of Bank Fees
- The New Exit Strategy
As Timothy Leary once said: Question Authority. Consistent questioning can become a powerful tool in your Get Rich Slowly toolkit.