IF YOUR IN TROUBLE SHOULD YOU TELL YOUR CREDIT CARD COMPANIES?
"Before the subprime lending crisis, the banks didn't have to bow and scrape for your business, but now they desperately need you," says Robert D. Manning, author of the book Credit Card Nation. "If you have a substantial debt load, they don't want to lose you" because someone with a big debt load is often profitable for the banks.

In other words, when you're facing an impossible credit card payment, you might have more bargaining power now on how to avoid missing it. In any event, you have reason to fight. Scott Bilker, the founder of DebtSmart.com, says your lender might raise your rate to as much as 32% if you miss a payment. If you were regularly paying off $140 per month on $5,000 of credit card debt at an original 10% rate that got jacked up to 32%, you could end up owing an extra $10,220 as a result.

But Linda Sherry, the director of national priorities for the nonprofit Consumer Action, cautions that people should be careful about discussing finances with the card companies. "If you believe you won't make the payment, you should call and talk [to the creditor], but it's a double-edged sword," Sherry says, explaining that companies use risk-based pricing and might end up seeing your phone call as an opportunity to hike your rates. "Do you really want them to know you're in trouble before you've figured out that you can't solve the problem any other way?" Sherry asks.

If you're sure to miss otherwise, you have nothing to lose by picking up the phone. When begging a customer service representative for mercy, it might help to invoke the laws on your side. "The Truth and Lending Act encourages banks to help people in financial difficulties with their loans and credit cards," Sherry says. "It's not pointed, but it's there." You can read it here to get ideas for arguments to pose. Another law that might help is the Fair Credit Billing Act, which you can read here.