personal finance
By Charlotte Cowles, the Cut’s financial-advice columnist. In addition to “My Two Cents,” she writes about work and parenting for the site. Previously, she was the senior features editor at Harper's Bazaar and a senior editor at the Cut. She was also the editorial director for MM.LaFleur. Her work has also been published in Glamour, Art in America, Politico, and other places.
Photo-Illustration: by The Cut; Photo: Getty Images
A few months ago, I received a weird bill for $316 from a physical therapist I visited last April. It seemed wrong; I remembered making a co-pay at my appointment, and my insurance was supposed to cover the rest. Or maybe it wasn’t — what did I know? I put the bill in my “deal with someday” pile and ignored it until I got a warning, printed in fat red letters, that it was about to go to collections.
As a Hail Mary (and because I was procrastinating a more pressing work deadline), I called the “billing questions” number at the bottom of the page, assuming I’d get stuck on hold and eventually speak to an exhausted call-center employee who would be powerless to do anything. Instead, a cheerful woman answered immediately, checked her “system,” and discovered that most of the bill was a mistake (I owed only $40, not $316).
Surprised, I asked her if this outcome was typical. Was she always this helpful and friendly? She said that billing flaws happen “pretty often” and that I was her first caller of the day (right at 9 a.m.), so that’s why she was so chipper and prompt. If I ever had this kind of issue again, she recommended calling at the beginning of business hours, before the lines get backed up and service representatives are tired and overwhelmed by huffy callers.
This unexpectedly positive experience made me wonder if these tactics would translate more widely. Should I try to challenge other medical bills (which are often erroneous, it turns out), or ask my credit-card company to waive my card’s annual fee? What else might be worth trying to negotiate, and how should I go about it? I talked to several financial experts about what works, what doesn’t, and what’s a waste of time.
1. Get more information.
If you get a bill that seems off or too high, do some digging. Do you have records of previous transactions with the same biller that are lower, or can you find competitors who are offering better deals? “The more specific numbers you can use to make your argument, the better,” says Beverly Harzog, a consumer-finance analyst and author of The Debt Escape Plan. “Do some cost-comparing so that you know exactly what to ask for.”
2. Understand which types of bills are worth haggling over.
This is a good time of year to go through all your bills and do what Harzog calls a “self-audit” —see which ones you could ditch (good-bye, unused online-yoga subscription), which ones are fixed, and which ones might have some leeway. This is also the season when a lot of bills get raised, which may open the door to asking if you can keep paying your original rate. Before you put time and energy into fighting a bill, however, consider whether you’re likely to be successful.
Credit-card companies are a good place to start, says Harzog. For instance, if your credit card has an annual fee, the company might be willing to waive it or switch you to another card with a lower fee. Or if you have carryover credit-card debt, you could try asking for a lower APR (the interest rate on your balance). One recent survey found that 76 percent of cardholders who asked for a lower APR got one and the average reduction was more than 6 percent —which could save you hundreds if not thousands of dollars.
Medical costs are another area with wiggle room, says Thomas Nitzsche, a director at Money Management International, a nonprofit debt-counseling agency and member of the Financial Counseling Association of America. As I discovered, health-care bills often contain errors; it’s worth cross-checking with your insurer’s explanation of benefits if something looks fishy. What’s more, lots of hospitals offer financial aid, payment plans, and charity care programs that could wipe out some or all of your charges. “Many health-care facilities are legally required to screen you for charity care if you’re a low- to moderate-income person,” says Nitzsche. “But they don’t usually publicize it, so you have to ask.”
Other bills that you might be able to reduce include insurance premiums (especially for your car, apartment, or home), phone bills, or other utilities bills, says Harzog.
3. Think about your motives — and your leverage.
“Before you ask for something, it’s important to think about what’s motivating you,” says Marc Modica, who teaches negotiation at the University of Virginia’s Darden School of Business. “It’s much easier to ask for something when you feel confident and justified in doing so, and you won’t feel cowed when you get pushback or someone says no.”
It makes a huge difference if you’re in good standing with the servicer you’re bargaining with, says Harzog. “You have to be a customer who’s worth keeping,” she explains. “With credit cards, that means paying your bills on time, having a great credit score, and being loyal to the issuer for at least a couple of years.” Alternatively, if you’re calling to ask for lower car-insurance premiums, cite your excellent driving record — and offers for better rates from other insurers.
Otherwise, calling to ask for special favors could actually backfire. “If you’ve missed payments, have a lower credit score, or are carrying a lot of debt, you don’t want to call attention to yourself,” says Harzog. “I know people who have actually had their debt limits lowered after they called to ask for the opposite.” So tread carefully.
4. Prepare a script.
Word choice matters, says Modica. “Remember that you’re trying to reach a point of mutual understanding,” he explains. “Stay calm and cordial.” If you come out guns blazing and insist that you deserve to get what you want, it doesn’t exactly create a problem-solving atmosphere. Instead, Modica recommends opening with something like, “I realize that it may not fit with your policy to do X, Y, or Z, but under these circ*mstances, I was hoping you might consider making an exception. I’ve been a loyal customer and I really want to keep using your services. How can we work something out?”
Don’t be scared off if you still get a “no” at first — that’s typical at the beginning of 80 percent of negotiation openers, says Modica. “You can respond by asking, ‘Why? What’s the problem?’” he suggests. The company’s explanation might reveal an alternative path forward.It also helps to have other proposals lined up. Maybe your landlord won’t reduce your rent, but he’ll throw in a month for free if you renew a longer lease. Don’t be afraid to keep asking for other solutions.
5. Try again.
As I learned, sometimes the time of day that you get a customer-service representative on the phone makes a difference in how you’re treated. You can’t always control for these variables, though. That’s why it helps to call again or try another form of communication if you don’t get the outcome you want at first.
“Many companies have different channels for customer service,” says Nitszche. “If you tried by phone and that didn’t work, maybe try the online chat or even a bot through the company’s app. We find that those channels are often handled very differently.” For instance, research has found that voice-only communication enhances empathy, so you might have better luck talking to a human on the phone; alternatively, that human might be hungover or having a bad day, in which case a bot might be more useful. In other words, be persistent.
Ultimately, trying to lower or contest your bills does have a cost: your time and energy. While I’ve had some excellent experiences with customer-service representatives who gave me full refunds and perks that exceeded my expectations, I’ve also had demoralizing interactions that wasted my time and made me furious for days. So choose your battles wisely.
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