How to Negotiate With Credit Card Companies
Sunday, June 7th, 2009 Subscribe To Our Feed
The average American household has nearly $10,000 in credit card debt, and many people are only able to make the minimum payment of 2% of the balance. If you just pay the minimum payment, then it will take you decade to pay the total amount. Since new legislation will make it more difficult to file for bankruptcy, it may occur to savvy debtors to try to negotiate a better offer with their credit card company in order to make it easier to pay off the balance. Is it possible?
It might be possible depending on your current balance,credit history and interest rate. Your best bet, especially if you have a history of paying on time, is to simply call your credit card company and ask if they will lower your interest rate. They will, if you tell them that you got a better offer from another company. If you have a history of paying late, however, they probably will not be willing to lower your interest rate. That is really unlucky because late payment has probably forced the credit card company to raise your interest rate in the first place. You can give a try, may be you are lucky.
If you’ve been paying your bills on time, asking for a lower interest rate may be the only option available to you. If credit card companies are receiving payment on time then they aren’t going to be too compassionate to your financial woes. On the other hand, if you’re late on your payments, especially if you’re more than three months behind, you may have some negotiating leverage. However, that leverage comes with a few strings attached. You may be able to bargain a lump-sum settlement for your outstanding balance, where the credit card company accepts a portion of your debt and writes off the rest. They’re often willing to do this instead of turning your debt over to a collection agency, as it’s cheaper just to settle. The negotiation amount will depend on your balance, your interest rate and your payment history. Though, this type of negotiation comes with a couple of problems of its own. What if you don’t have the money to settle all at once? If you can’t pay your bills on time, then how will you pay the lumpsum settlement cash at once. Additionally, the amount of your debt that gets written off will show up on your credit report as bad debt, and that will stay there for seven years.
Your credit card company may or may not be willing to work out a payment plan, but it costs you nothing to ask them, and negotiating a settlement with them may be cheaper for you than if you consult with a debt consolidation firm. If your credit card debt is big and you just can not make the payments, it is worth a try.
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