Tough Negotiations With Credit Card Companies

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One of our readers, Karen, recently left this comment:

I opted to pull out my 401k early to pay off debt. In doing so I’m losing about half of my retirement money. There are taxes and penalty fees for early withdrawal, not to mention the loss I took in the stock market. Bottom line is if I pay off all that I owe in credit card debt and loans, I will be broke. I had to quit my job to pull out my 401k, so the credit card debt has gone up due to late fees and over limit fees. I want to negotiate a fair amount with the lenders so I can pay them off. Is this a goal I can likely achieve?

Thanks for your question Karen!

I am sorry that you had to pull out your 401(k) money. Paying off all of your debt and loans is an excellent goal though, and it will put you in a much better financial position. To answer your question, yes, you can definitely negotiate with your lenders (All your lenders, not just your credit card companies) to get late, over the limit and any other fees removed. Especially if you are willing to pay the accounts in full.

In order to do this, you will need to get your paperwork in order first. Pull together the names, addresses and phone numbers of all your lenders. Make sure you have the current total owed as well. Then, all you have to do is give them a call. There are five key things to remember when negotiating with your lenders:

  • Be Polite – After all, you are asking them to do you a favor by removing fees. The nicer you are, the more likely the person on the other end of the phone will be willing to help you.
  • Be Persistent - Always remember that this is your money, not theirs. You re the one that has to “keep at them” until you get what you want. If the person you are speaking to says they cannot help you, ask them who can, and more importantly, ask them what they are allowed to do for you.
  • Speak with a manager - If may be very necessary for you to speak with a manager in order to get your fees removed or your totals reduced. Don’t be afraid to politely ask for one, and just deal with them instead of a normal representative.
  • Call Back If Necessary - This goes along with being persistent. Not all managers or representatives are going to be willing to help you. I wish I could say differently, but it’s the truth, from my own experience. If you are talking to someone who refuses to help you no matter how polite you are, or what you do, then simply hang up, wait a while and call back. Do not make a payment until you have reached terms that both you and your lenders can agree on.
  • Get It In Writing - As with any type of debt settlement, make sure that you get the new agreement in writing. Have them fax you a copy of the revised total, or an agreement that states you will pay the account in full once the fees are removed. If you do not get these types of thing sin writing your lenders could come back at a later date and claim that you still owe them money. Worse yet, you could see that remaining debt (that they were supposed to remove from your account) sold to a collections company at a later date – all without your knowledge.
  • We also had another reader with a similar question about debt negotiations. Andrew left this comment:

    I lost my business in April of this year and things are starting to catch up. I spoke to Chase on my business card and they agreed to cut my payments in half as well as my interest rate for a year, which helps a lot.

    Bank of America however will not do anything. I called and asked to negotiate a payment plan but they said they would refer us to a non-profit for credit counseling. This is after they did a pull on my credit which i did not authorize. I do not want to go to a non-profit credit counseling. If Chase can help me with payments why can’t BofA help me out too? Should I keep calling or requesting to talk to someone else there? Any advice on how to approach the difficult nature of BofA. Who should I ask for? What else should I say? Should I wait for it to go to collections to negotiate with them? or at least threaten them with, “Im paying Chase first before I pay you, since they are helping me”? Please help…

    Details:

    Payment is about 450 and was requesting half. I am one month late now. I told them next month will be hard as well and that I lost my business in April this year. Interest rate is 30% with a balance a little over 12k.

    Thanks

    Andrew

    Thanks Andrew, for your question. They steps you are going to need to take are similar to the ones for Nancy above. There are two differences though. Since you are not going to be paying your balance off in full, you do not have quite as much room to negotiate with your lenders. However, being a month past due actually gives you as much or more room to negotiate. This is because the collection departments at ever major credit card company have a lot more authority to alter your account.

    So, that said, what should you do?

    Definitely call Bank of America back. Do not let the account site without contact – take the initiative, and keep calling them as many times as you need to until they are willing to set up a reasonable payment plan.

    Make sure that you speak with a manager (politely). Request that all possible fees be removed from the account, and ask them what you need to do to set up a payment arrangement with them. Tell them you are handling your credit accounts yourself, and that you will not be going through a credit counselor. Make sure they know that if they want to resolve the account and get a payment from you that they need to deal with you, and you alone.

    It’s a pretty standard procedure for most collection departments to set up payment arrangements, so I do not anticipate that you will have any trouble. If you do, and they give you trouble like they did before, just hang up and call back to reach a different rep. Or, wait about eight hours and call back to reach a different manager. Explain your circumstances, tell them what you can afford to pay them, and then make a payment that day.

    It is important to be ready to make a payment before you call otherwise, they may not be willing to negotiate with you at all.

    I hope that this answered your question. If you run into any more trouble, or have questions about anything else, please leave us another question and we will do what we can to help you out.

    Thanks!
    Mr. CC

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    2 Responses to “Tough Negotiations With Credit Card Companies”

    1. Jennifer Says:

      I paid off my Capital One card in full and asked to have it closed-simply because I had another Capital One card. I wanted to reduce the number of my cards. After I paid the balance in full, Capital One passed me to a sales representative who tried to sell me a better interest rate, etc in order for me to keep my account open. When I said I wasn’t interested and didn’t want to hear his sales pitch, he hung up on me and never closed my account. I learned this a month later when I rec’d a bill from Capital one. When I called to question this, I had to talk to outsourced customer service agents in India who could barely speak english.

      My comment is, you are right in the sense to do all the things you list, it just seems a bit unfair to have to jump through hoops, speak to manager, write letters, get it in writing to simply close an account. When you call to close an account, they should close your account, no sales pitches, no questions…no hoo-haa. There use to be a phrase in business-The customer is always right. I just feel costumer service went out the window with credit card comapnies.

    2. cyrus Says:

      Credit card companies make it as difficult as possible to close your account. I still haven’t managed to close an account I have had for years. The last time I called them, the phone disconnected me after 1 hour of waiting.

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