Negotiating Lower Credit Card Payments and Balances

If you’re struggling with high credit card debt, you’re not alone. Many people find themselves owing more on their cards than they can reasonably pay back month to month. The good news is that you have options for getting your payments and balances down to more manageable levels. This article will walk you through some strategies for negotiating with credit card companies to reduce your monthly payments, interest rates, and overall debt.

Get organized

Before you start negotiating, take some time to get organized. Pull out all of your credit card statements and make a list of each card, the balance, interest rate, minimum payment, and customer service number. Having this information handy will make the process smoother.

Next, look at your budget. How much can you realistically afford to pay towards your credit card debt each month? Be honest with yourself. If you agree to payments you can’t handle, you’ll end up right back in debt.

Decide your goals

Now that you see the full picture, decide what your objectives are for negotiating. Here are some potential goals:

• Lowering your interest rates – This will save you money on interest fees.
• Reducing your minimum monthly payments – More affordable payments can help you avoid missed or late payments.
• Getting late fees waived – You have a good case for waiving late fees if you historically paid on time.
• Settling debt for less than you owe – Offer a lump sum payment to settle accounts, if you can.

Keep your goals reasonable – asking for a super low payment and 0% interest on a card you never pay on time isn’t likely to happen.

Review credit card company policies

Before you call, be sure to review your credit card contracts and the company’s policies on their website. Look for details on:

• Hardship programs – These can lower payments temporarily for those facing financial struggles.
• Current interest rates and criteria for lowering them.
• Settlement offers – Some companies advertise settlement offers on past-due balances.

Knowing the standard policies will help you go into the negotiation informed.

Call customer service

Now it’s time to call. Have your account information, budget, and goals handy. Ask for the hardship or retention department – this is where negotiators typically work.

Explain your financial situation and why you need lower payments or interest rates. Have specifics on why you’re struggling (lost job, medical bills, etc). Be polite and don’t get frustrated if the first person you speak to can’t help. Often you need to escalate the call to get the best deals.

If the company won’t work with you, be persistent. End the call politely and try again with someone else. Go into each call with an open mind – you may get different offers from different representatives.

Get any agreement in writing

If you do reach an agreement, get it in writing before ending the call. You want a letter or email confirming all the details – the new payment or interest rate terms, how long the agreement lasts, etc. This protects you from any miscommunications down the road.

Other negotiation strategies

Here are some other tips for making your credit card negotiation successful:

• Leverage competitor offers – Mentioning better rates from other cards can motivate your company to match.
• Use retention offers – When you threaten to close your account, issuers may offer perks to keep you.
• Try goodwill adjustments – You can ask for late fees to be removed as a courtesy.
• Set up automatic payments – This shows you’re committed to on-time payments.
• Pay something – Making a show of good faith, even a token payment, can help.

When to get help

You may want to enlist the help of a credit counseling agency if:

• You are overwhelmed with debt and need help with budgeting.
• You cannot get your credit card company to work with you.
• You have multiple debts to juggle beyond just credit cards.

Non-profit credit counseling provides advice for free. Be wary of for-profit ‘debt settlement’ companies – their fees can be steep.

Other debt relief options

If negotiating doesn’t work, look into:

• Debt management plans – Credit counseling agencies can set these up. All your payments are consolidated through the agency, which negotiates lower rates and fees.
• Balance transfer cards – These cards offer a 0% intro APR for balance transfers, allowing you to pay down debt faster.
• Debt consolidation loans – Taking out a personal loan to pay off credit card balances can lower your interest rate.
• Bankruptcy – This is a last resort option that gets much of your debt discharged. Bankruptcy stays on your credit report for 7-10 years.

Avoid risks

As you negotiate debt, be careful to avoid:

• Paying upfront fees – Never pay a company that promises to negotiate for you but requires fees in advance.
• Making payments you can’t afford – Be realistic so you don’t end up in another cycle of debt.
• Closing credit cards – This can hurt your credit score, unless you pay them off first.
• Taking out a loan to pay off cards – You don’t want to overextend yourself with debt.

Improve your financial health

In addition to negotiating your existing debt, take steps to improve your financial health going forward:

• Make a budget to avoid new debt.
• Boost your income with a side gig if possible.
• Build an emergency savings fund.
• Limit unnecessary expenses.
• Pay down cards with the highest interest rates first.
• Review your credit reports regularly.

Getting your debt under control takes time and discipline. But being proactive about reducing interest rates and payments can really accelerate your progress. With some planning and negotiation, you can make your debt more manageable.