How to Negotiate Credit Card Debt

1/10/20 Ricky Baizas

For those of us with multiple credit cards, it is easy to spend more than we’d like and rack up more debt than we can pay back each month. Combine that with compounding interest charges and it’s easy to see how quickly that debt can get out of control. If you are squeaking by and just making the minimum payments due every month, it’s not uncommon for the majority of that minimum payment to go towards interest charges, which is why paying off a credit card can take years, if not decades.

If you’ve accumulated credit card debt to a point that you feel that it is out of control, all hope is not lost! There are plenty of folks out there who, unfortunately for them, have been in this position before and have found ways to work with their credit card companies to pay down the debt, or even get rid of them completely.

Start by seeing how much (and who) you owe.

It might be a little uncomfortable at first, but start by being honest with yourself and tally all of your debt (and to whom you owe) on an Excel spreadsheet. If you don’t know who holds all of your credit accounts, you can check your credit report for free to see whom you owe. If (after totaling all of your debt) you find yourself in a massive hole, you’ll at least be able to see how much you’re working with, and what you can afford to pay back each month. Use the total debt amount to set a budget and focus on paying it down; even if this is just the minimum amount due it’ll keep the credit companies from harassing you. You can later increase your payment amount (above the minimum monthly payment) as your budget allows.

If you have reached the point of no return, or you cannot make the minimum payments, it might be time to negotiate with the credit card companies so that you can avoid them sending your account to collections.

Negotiate your debt to potentially save some money.

Not being able to make your minimum monthly payments is not the end of the world. In fact, credit card companies not only want the money that you currently owe, but they’d actually like to keep you around even longer to make more money from you. Understanding this viewpoint gives you a little leverage when it comes time to negotiate with the credit card company.

First of all, call them and talk to a representative. Don’t just email or fill out a form on their website; this needs to happen in real time with a real person. Let them know that you’d like to discuss your options on paying down your debt and that you have a budget that you are working with. This is where the negotiation starts, so be on your toes so that you completely understand all of your options.

One path that you can take involves offering to pay the balance right then and there, but for a lesser amount than what is actually owed. For example, some creditors will waive late fees or some of the interest that has accrued on the account if you pay the debt in full right there over the phone. This can save you a considerable amount of money, depending on the late fees and interest that have accumulated on the account. This opportunity should present itself by you saying, “If I owe $1000, can we consider this debt cleared if I make a payment of $800 right now?” Your offer can be any amount, as the worst case that can happen is that they’ll say, “No!”

Even if you don’t have the cash on-hand to pay off the amount of the debt, you can still see if they’ll waive some of the late fees or interest charges. If you can’t pay off the debt right there over the phone, see if they’ll lower your minimum monthly payment, and commit to making those payments every month. The payoff process will take longer, but you’ll definitely be on the path to lower debt and a higher credit score.

If you have multiple past-due accounts, a personal debt-consolidation loan (like these offered by LoanMe) is a viable option to help jump-start you in getting those accounts up to date. LoanMe offers personal loans that have flexible repayment options with little to no collateral required. You will also have their support to manage your debt and help you gain financial confidence.

You’re now on your way to financial freedom.

Regardless of the monetary amount of your debt, creditors will generally be willing to work with you to make sure that they get their payments.

These techniques aren’t just for credit card companies, either. If you get behind on payments for an auto loan, a mortgage, or even student loans, make phone calls and notify the creditor of your situation, and that you’re willing to work toward paying off your debt. Your pocketbook will thank you, and you’ll have peace of mind knowing that you are working toward a more solid and predictable financial future.

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