Negotiating credit card debt is a possibility for those who have taken on untenable amounts of high interest debt. There are many different ways that a negotiation can be approached, and before deciding which route to take, it is important to take stock of each repayment option and the long term impact these steps can have on credit scores. It is also important to consider whether one would feel comfortable negotiating credit debts themselves, or whether dealing with a professional service would be most effective in their situation.
One of the easiest ways to negotiate credit card debt is to ask for a lower interest rate. The initial discussion can be held over the phone, and for those with a solid payment history (rarely missing monthly payments) it is common for credit card companies to agree. So, for those that are established customers, this can be the first step in ensuring that those monthly payments go farther in reducing the total balance on a credit card. In a similar vein, longstanding customers for whom repayment trouble is more recent, it is worth asking about waiving certain fees associated with the card. If late payments are rare, many companies will waive individual late payment fees. If one can obtain lines of credit through checks written on the card, those interest rates may be negotiable as well.
For those who have had consistent difficultly in paying credit cards monthly, the process of negotiating your credit card debts are a little different. Often, in the interest in making sure that money is recouped, they are willing to negotiate a payment plan that is mutually agreeable. When working towards these payment plans, make sure that terms are such that they can be met, and that you will not be incurring additional interest or penalties.
Another option for those carrying a large balance on credit cards is to act in much the same way outside credit agencies would: offer to buy their own balance for a lower lump sum. Many companies are willing to negotiate these lump sum payments for significantly less than the outstanding balance, in an effort to ensure that at least some of the amount is paid. While some experts recommend this as a viable way of negotiating with credit card companies to reduce debt, this solution will adversely impact your credit score for the next seven years. This will be recorded on your credit report as a “charge off,” the same terminology used when selling an account to a collections agency. With a charge off on a credit report, credit scores plummet, and make getting any future line of credit incredibly difficult and mean higher interest rates down the line.
For some hoping to negotiate their credit card debt, the best option is to consult the experts. The nonprofit Consumer Credit Counseling Service is a good first stop when deciding how to proceed. Additionally, there are many for profit services that will walk clients through the process. Most services that specialize in negotiating credit card debt do not charge fees upfront and can be invaluable in helping navigate the process.
Comments on this entry are closed.