How to Negotiate Down Credit Card Debt Yourself

It’s very easy to start drowning in credit card debt very quickly. All it takes is the loss of a job, large medical bills, or other unforeseen expenses or setbacks to put you on a trail that leads to high interest payments and ultimately financial ruin. However, if you are in over your head currently, there is a way out. You may be able to negotiate down your credit card debt.

The most effective way to negotiate your debt is to call the company yourself. There are many debt consolidation companies out there today, but if you don’t know which one you’re using, they could easily unnecessarily ruin your credit score or charge you unnecessary fees.

When you call your credit company, you have three different avenues you can go down to negotiate your credit card debt. You can ask to have your APR reduced, monthly payments cut back, or even have the total amount of debt you owe slashed. Depending on how far in debt and how far behind on payments you are, there’s several different tactics you can employ.

Try to Lower Your APR First

A high APR can ensure that you will be in credit card debt for a long time. You will never get out of debt spending all your money on interest and not on your principle. This is also one of the easiest things to negotiate with your credit card company because of the cut-throat competition in the credit card market. Calling your company to reduce your payments may even work if you’re not yet behind on payments. Being a paying, loyal customer may even help you with lowering your APR.

To accomplish this, call your bank and tell them that you’ve gotten either a better offer from another credit card or a balance transfer offer. Most times your bank will be willing to negotiate down to a lower rate for you to keep you as a customer. However, if your interest rates are high because you’ve missed several payments, this tactic may not work. Your company may be reluctant to lower your rate until you’ve proven that you can pay on time.

Next Try to Lower Your Monthly Payment

If you are late on your bills, but haven’t yet been referred to a collection agency, the surest way to get rid of some of your debt burden is to attempt to negotiate your monthly payments. The goal is to get your payment low enough that you can live and don’t have to run up any more credit card debt. Be warned, however, that paying off less of your principle each month means you’ll be in credit card debt much longer than if you could make the full payment.

When you call your company, make sure that you are prepared, especially if you’re not yet late on your payments. List out all the reasons you cannot make your payments, and don’t be afraid to try to pull on a few heartstrings. Your account manager will be much more willing to lower your payments if you make a convincing argument.

Negotiating Down the Debt You Owe

If your account is in collections, that is you are so behind on your payments your account has been turned over from the credit card company to a collections company, negotiating away some of your debt may be an option for you. If you are able to make a lump sum payment for a certain percentage of your debt, the company in most circumstances will accept it.

This is because when your account has passed into collections, the goal of the collections company is to receive some kind of money from you. As your account becomes more and more past due and the collection agency’s chances of receiving any payment become less and less, they are more likely to make a settlement. The fact that your account is so far past due is proof that you are a risk for non-payment. This makes it in the collection agency’s best interests to accept a lump sum payment from you because it is a sure thing. Otherwise they may not get any money in the future at all.

While this may seem like an easy way out, you should not let your accounts go into collection just because you are having trouble paying your bills. Debt negotiations DO go on your credit report and include how much was negotiated away. This can worsen your credit score and make getting a loan in the future harder and more expensive. However, this credit report hit you take from debt negotiation is far less than that you would take if you declared bankruptcy.