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 on the credit card company that you are dealing with. (Read about how to avoid credit card debt.)

When to Negotiate With Your Credit Card Company

Your negotiating strategy will depend on timing. If you're not struggling with your payment, you might be able to get a better interest rate. If you are in financial hot water, you might be able to get better payment terms or dates, or perhaps a short reprieve from payments.

When Times Are Good

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

When You Are 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 is 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 there is a sudden illness or family emergency that you need to tend to.

Other companies may cut off your credit if you provide any hint that you may have trouble making the payments. So you need to be careful when you decide to negotiate, who you decide 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

There are many options to explore when you are negotiating a settlement of credit card debt. They can be as small as:

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

If you need bigger concessions from the credit card company, the company will likely cut off your credit, at least until you are paid up, but often longer. If you are having serious financial problems that are not likely to be resolved in a few months, you can explore these possibilities with the credit card issuer:

  • forbearance agreement (no payments) for a period of time
  • long term repayment plan with reduced or no interest, or
  • lump sum settlement payment at a reduced amount.

(Keep in mind you could have tax consequences if you settle the debt for less than you owe. To learn more about negotiating a settlement, see Credit Card Debt Settlement. Or, 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 payday, 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 will be transferred to if you are 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. But if you are calling for a more serious problem, the customer service department will probably not be able to help you at all, 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 there is another department you can speak to, or ask for a supervisor. You might need to go through more than one level before you reach someone that has 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 on the settlement payments, the creditor may not be willing to renegotiate with you.

Getting Help

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

  • Credit counselors. Stick with nonprofit agencies that provide free or very low-cost service. Scams abound, so read Beware of Debt Relief Services to learn which companies to use and take the time to learn about which options you should generally avoid, such as many debt management plans and debt settlement companies. If you need help negotiating with creditors, in the vast majority of cases, you'd be better off hiring an attorney rather than using a debt settlement company. (To learn more, read Lawyer vs. Debt Settlement Company: Which Should I Use?)
  • Bankruptcy attorneys. A Chapter 13 bankruptcy can allow you to keep your property while paying all or part of your debt over a period of three to five years (often even if a creditor does not agree). Many debtors can file for Chapter 7 bankruptcy and lose little or no property, and discharge their credit card debt. (Learn more about Chapter 7 and Chapter 13 bankruptcy.)

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