What to Know About Negotiating on Credit Card Debts

Negotiating on Credit Card Debts

Credit cards offer instant access to short-term credit but can lead you into a debt trap if used recklessly. This piling up of your credit card balances can be troublesome and lead you to a position where you find it difficult to repay them and your credit score tumbles. This is in turn impacts your ability to get loans in the future. Instead of the credit card issuer looking for you to collect their payments, it is always better that you contact them and get your debt settled.

How to Negotiate Your Credit Card Debt?

When you submit your credit card application online, do check the terms and conditions attached to it. The awareness about the various charges will help you plan your finances and avoid falling into a debt trap. However, certain unexpected events may make it difficult for you to pay off your monthly credit card bills in full and result in the piling up of outstanding balances that attract high credit card charges in the form of interest rates. In such a scenario the credit card company can sue. But quite often, the banks or the credit card issuers prefer to negotiate the debt so that they can get some of their money back.

The settlement of your credit card generally involves an agreement to settle your debt for an amount that is lower than the original dues. Here are some ways in which you can negotiate your credit card debt:

Forbearance or Temporary Payment Reduction

This option is highly useful when your financial troubles are temporary and likely to return to normal after some time. In such a case you can ask the credit card company to reduce your payments for a few months allowing you to recover. This is possible by either the reduction of the interest rate or the monthly minimum payment besides the elimination of the late fees.

Partial Settlement-

This type of negotiation happens when your financial woes are likely to last longer and there is no way that you will be able to pay off the full amount owed. The creditor may agree to waive off credit card late payment fees or interest rates if you agree to pay the principal amount in one go.

Things to Keep in Mind While Negotiating Debt Settlement

Negotiating for a reduction in your debt is not easy as the credit card company will lose revenues. You need to keep certain things in mind:

  • You should convince them by showing proof that your financial position is not good enough to pay your dues. 
  • You have to negotiate with them and reach an agreement on the amount that you can afford to repay. 
  • You should discuss how the new arrangement will be reported to the various credit bureaus. Try negotiating for it to be shown as a full settlement. 
  • Get in writing the arrangement agreed upon.

In case you are finding it difficult to negotiate your credit card debt settlement yourself, seek the help of professionals who get in touch with the credit card companies and work it out. Whether you negotiate yourself or seek the help of a debt settlement company, your credit history will be impacted. So, it is always better to be aware of the fees involved when you apply for an instant credit card.