Negotiating on Credit Card Debt

You can often negotiate better interest rates, payment dates, and even long-term payment plans and settlements on your credit card debt.

It's often possible to negotiate terms, interest rates, and payments on credit card debt. You can also try to negotiate a settlement of the amount you owe. The steps you take and the options available will depend on your situation and the credit card company you're dealing with. Your options might include:

  • moving a payment date
  • reducing the interest rate
  • asking for a temporary payment reduction.
  • entering into a forbearance agreement, which requires no payments, for a specified amount of time
  • working out a long-term repayment plan with reduced or no interest, or
  • paying a lump-sum to settle the debt.

Your negotiating strategy will primarily depend on timing. If you're not struggling with your payments, you might be able to get a better interest rate. If, however, you're in financial hot water, you might be able to get better payment terms or dates, perhaps a reprieve from payments, or settle the debt for less than you owe.

How to Negotiate When Times Are Good

If you're not having trouble paying your debts and you have a good credit history, you might want to contact your credit card companies to ask for a lower interest rate. While the answer could initially be no, if you tell them that you're considering switching to a card with a lower rate, they might be willing to work with you.

How to Negotiate When You're Having Financial Problems

While credit card companies encourage you to call them if you anticipate having problems repaying your debt, some are more amenable to working with you than others, and it's almost impossible to guess how they will react until after you call. With most companies, you should call if you know your payment will be late by a few days, or if you think a change in the regular payment date—such as moving it from the first of the month to the middle of the month—will make it easier for you to pay on time. Many companies may also provide you with relief if you are temporarily out of work or if a sudden illness or family emergency arises that you need to tend to.

Other companies might cut off your credit if you provide any hint that you could have trouble making the payments. So, you need to be careful when you decide to negotiate, who you choose to negotiate with, and how much you tell them about your financial woes. If you do call, be prepared to respond to the credit card company's concerns. Finally, don’t let a bad experience with one creditor discourage you—others might take a different approach.

Credit Card Settlement Options

A few of the many options to explore when you're seeking assistance with credit card payments include:

  • moving a payment date
  • reducing the interest rate, or
  • asking for a temporary payment reduction.

If you need more significant concessions from the credit card company, the company will likely cut off your credit, at least until you're paid up, but often longer. If you're having severe financial problems that aren't likely to be resolved in a few months, you can explore these possibilities with the credit card issuer:

  • entering into a forbearance agreement, which requires no payments, for a specified amount of time
  • working out a long-term repayment plan with reduced or no interest, or
  • paying a lump-sum settlement.

(To find handy forms to help you craft a settlement offer, check out Nolo's eForms: Offer to Pay Debt in Installments, Offer to Settle Debt With a Reduced Lump Sum, and Request Short-Term Lower Payments.)

Who Should I Talk to at the Credit Card Company?

Who you talk to depends on what you want to negotiate.

Change payment date. If you just need a change in the regular payment date (to coincide with your pay day, etc.), you can probably talk to anyone in customer service.

Interest rate reduction. Asking for an interest rate reduction might require a manager to get involved.

Your payment will be late. Many companies have a specific department that you'll be transferred to if you're calling because you anticipate that a particular payment will be a few days late. You might even be able to have the late fee waived if you call in advance on this.

Negotiating settlements or long-term payment plans. If you're calling for a more serious problem, the customer service department probably won't be able to help you, even if it says it can. Be polite and talk with the representative, but if, in the end, the representative says no to your request, ask if you can speak to another department, or ask for a supervisor. You might need to go through more than one level before you reach someone with authority to negotiate.

Get the Agreement in Writing

No matter what agreement you ultimately reach, make sure you get the agreement in writing and stick to your payment plan. If you have more financial trouble, contact the creditor before you fall behind so you can renegotiate. If you wait until you default, the creditor might not be willing to renegotiate with you.

Getting Help

If your credit card company won’t work with you, consider getting help from outside sources. These include:

  • Credit counselors. Stick with nonprofit agencies that provide free or very low-cost service, like those affiliated with the National Foundation for Credit Counseling (NFCC). Scams abound, so learn which companies to use and which ones to avoid, like debt settlement companies, and take the time to learn about the options you should generally steer clear of, like many debt management plans. If you need help negotiating with creditors, in the vast majority of cases, you're better off hiring an attorney rather than a debt settlement company.
  • Bankruptcy attorneys. A Chapter 13 bankruptcy can allow you to keep your property while paying all or part of your debt over three to five years, often even if a creditor doesn't agree. Many debtors can file for Chapter 7 bankruptcy and lose little or no property, and discharge their credit card debt.

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