Negotiating With Your Credit Card Company

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Prior to my bankruptcy I successfully negotiated with three different credit card companies. I had my interest rates reduced, and my late and over the limit charges removed. One of our readers, Surbhi had several questions about that process, and I wanted to take a little time to relate my experiences, as well as help Surbhi take the next step:

Hello,

I have been searching your website. Our debt at the moment amounts to about 66% of our salary. We are so far current with all our cards but are finding it increasingly difficult to pay minimums. Also all of the minimums are going towards interest only, so making those payments is of no use.

I was thinking of going to a credit reduction plan when I came to your site I have the following questions. I intend to call all my companies to see if they will reduce my interest. How low should I request the interest to go before I accept. Can I request them to take out late payments for the past year or is it limited to the month you are calling?

Also can they recalculate your interest for past months on a lower interest rate, Is it something that consumers can ask for? Or is it limited to that month only?

Also to expedite the payment can you fix a minimum for the months coming and the dates for it as well.

I really would like to solve this problem on my own. I find it rather unnerving that I have to go through a credit company and give them any sort of power of attorney.

Thanks
Surbhi

Hi Surbhi! Let me break down your question a piece at a time.

>>We are so far current with all our cards but are finding it increasingly difficult to pay minimums.

It’s excellent that you are current on your payments. It should give you a bit of bargaining power when you call your credit card company.

>>Also all of the minimums are going towards interest only, so making those payments is of no use.

Well, while those minimum payments are not helping you to get your debt paid off, they do serve a useful purpose – they protect your credit rating. Not having to take time to go back and fight bad information on your credit report, or pay more interest on your future loans is still useful. We just need to get you one step further so that you can reduce your debt – that’s the most important thing.

>>I was thinking of going to a credit reduction plan when I came to your site.

You can certainly do that if you need to. I’ve linked several articles at the end of this post that will help explain that process a bit, and help you select a service if you do choose to use one.

>> I intend to call all my companies to see if they will reduce my interest. How low should I request the interest to go before I accept.

It depends on what you are currently paying. Personally, I would try to at least get zero percent rate for a few months, even if the rate goes back up again. But if it is going to take you a while to pay down your debt, then it makes more sense to negotiate with them for a permanently reduced interest rate that will be higher than 0%. The answer here is, take what you can get! But don’t be afraid to keep negotiating until you are satisfied with the answer.

As a general rule of thumb, if this is a high interest card (19% to 24%) I would at least get them to knock the interest down to 9%-10%. If you have a clear and on-time payment history, you should be able to get them to do this. If the card already has a 5%-10% interest rate, you may not have as much luck getting the rates reduced.

>>Can I request them to take out late payments for the past year or is it limited to the month you are calling?

You should absolutely ask to have the last years worth of fees removed from the card. It doesn’t mean they will do it – each company’s policy on this is different. Capitol One, in particular does not like to remove fees. Some credit card companies will remove every fee on the card for the entire year, and sometimes they will remove all fees period. But one thing is sure: your credit card companies will never remove any fees for you unless you ask – and be persistent! Ask them if they can remove more than one fee for you, or waive the yearly membership fee, etc. You will need to talk to a manager.

>>Also can they recalculate your interest for past months on a lower interest rate, Is it something that consumers can ask for? Or is it limited to that month only?

You should definitely ask about this – again it will depend on the company’s policy. If they do it at all, they can likely adjust the entire balance, not just the last month.

>>Also to expedite the payment can you fix a minimum for the months coming and the dates for it as well.

You can definitely set up a payment plan with them, yes.

Ok Surbhi. There is one more piece of advice I can give you here – but you may not want to take it.

The things that you are talking about doing, a normal customer service representative might not be able to help you. They just aren’t trained to do it, and they may not have the authority to do it. So, if you call them, and they are unable to help you, you have two options.

1) Threaten to balance transfer your debt unless they work with you & speak with a manager -
Do not threaten to close your account, balance transfers are the more effective weapon. Just keep reminding them what good customer you have been, and how happy you have been with them. But be firm and assure them that you will not allow the situation to continue like it is. A simple:

“The high interest and fees on this card are killing me! I am going to have to balance transfer my debt to a different company if you are unable to help me today.”

2) If the manager will not work with you, and you actually do not want to balance transfer your debt, then your best option is to go about 2-4 weeks past due on your bill.
Just to the point where you get a phone call from a collections rep.

The collections reps at every credit card company are trained to do everything you need. They usually have the authority to negotiate and make changes to your account. If they do not, the collections manager certainly does. Just make sure that you can make a payment with them the day that you negotiate.

I put this as a last option because it will hurt your credit score. However, you can also negotiate with them to not report the payment as “late” on your credit reports as long as you make a payment that day.

Also know that if you go through a credit counseling agency, they will most likely hold your payments until you go past due anyway – because that’s when it’s easiest to negotiate. So – be warned of that! It’s a lot better in my opinion to manage things yourself so that you can control the amount of damage done to your credit rating.

If you do want to know more about credit counseling, you can check out the articles below. Thank you so much for your question – I hope this helped!

Have a question for us? Leave a comment below!

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5 Responses to “Negotiating With Your Credit Card Company”

  1. Jill Skinner Says:

    Mr. Credit Card,

    We have kept up all our payments and haven’t been 30 days late in 5 years. However, we are really struggling. Our parents are helping us since my husband became Underemployed 18 months ago. It is becoming increasingly difficult to make it each month. We have considered just defaulting, credit counseling and bankruptcy. Which one will look better in 7 years? HOw will each affect us immediately? If we default, how long before they will go away? What can they really do to us? Can we even file bankrupcy while we are current? Is the new bailout likely to help us any? We currently owe 38,000 in unsecured debt, 116,000 on two mortgages on our home which is valued around $120,000 and 30,000 on our two vehicles which are needed to contiue to work. Our income in 2006 was $72,000. In 2008 we expect about$30,000. HELP!!! Any advice is appreciated.

  2. Jay Says:

    My wife and I earn $145,000 per year combined but have over $600,000 in debt. This includes over $308,000 in mortgage loans for rental properties, over $170,000 in student loans, over $8000 in 401(k) loans, over $18,000 in car loans, and over $93,000 in credit card debt.

    Although our debt is exorbitant, we have been making real progress towards paying off debt (over $15,000 in the last 6 months). We have never been late on any payments, and aside from a high-interest credit card that will soon be paid off, our interest rates are pretty manageable.

    After reading this article, I am considering a new strategy for paying off debt. When I am ready to pay off the full balance on a card, I would like to hold payment for 2-3 weeks (just before the 30-day past due note would be made on my credit report). Then, I want to negotiate a full payoff at a reduced amount. I would like to do this in a way where a certain percentage of the interest charges are removed from the account retroactively instead of the debt being “forgiven” so that there are no tax consequences or necessary notations on my credit report aside from “Paid as Agreed”. Do you think this is the best strategy?

  3. Sherry Mack Says:

    We will be getting some money from the sale of a house soon (but we’re practically giving the house away due to the economy). We owe $27,000 in credit card debt (most of it used to refurbish the house).

    By paying the debt in full will credit card companies give you a break, like a percent reduction in what you owe? Anything? Any advice?
    Thanks,
    Sherry

  4. Renee Jackson Says:

    Hello,

    My mother’s hoping to settle a credit card debt in the amount of $20,000. She has never missed a payment or has been late. She wondered how to settle without paying the full amount. Is this possible? If so, how would she go about doing this? How low could she possibly go without insulting the credit card company? You’re assistance would be greatly appreciated.

    Regard,
    Rj

  5. Robert Says:

    Just stop paying them. If you don’t own property they can take nothing from you, fuck them. In California, they have to agree to not prosecute to be able to market their cards. I don’t have to file bankruptcy. I don’t have to pay them. All they can do is ruin my credit rating. Big deal, they’ve already done that. SCREW THEM! Just stop paying them.

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