Paying Off Debt

5 Tips to Successfully Negotiate Credit Card Debt

May 28, 2024
Britt and Laurie-Anne two women laughing and looking at their computers on a couch in a well-styled living room
Britt & Laurie Anne
Two female investors in their 30s with a collective net wealth of over $6 million+
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Credit card debt is extremely prevalent in our culture. Credit card debt is at an all time high – $1.3 trillion in the US. (Yes, that’s “trillion” with a “t”.)

Worse, credit card debt is extremely predatory. The interest rates on credit cards are sky-high – about 24% on average – which makes it difficult to get out of debt.

So, if you’ve been struggling with your credit card debt, then it may be time to stop playing by the credit card company’s rules and change the game so it’s more in your favor. It’s time to call up your credit card company and negotiate a better deal that’s easier for you to pay.

Today, I’m going to give you 5 tried-and-true tips to successfully negotiate with credit card companies. I know that this may sound intimidating, but I’m going to walk you through it.

5 tips to negotiate with credit card companies

1. Understand your situation

Before you start negotiating, have a clear understanding of your financial situation. Know how much you owe, your income, expenses, and any assets you have.

This is crucial to understand how much is coming in and out of your bank account every month and how much you can reasonably pay so you know what you can potentially offer.

2. Communicate early and respectfully

Don't wait until you've missed payments to contact your creditors. Reach out to them as soon as you anticipate having difficulty making payments. It’s kind of like letting your boss know in advance if you don’t be able to make a deadline as opposed to just missing it and them needing to reach out to you.

Early communication shows that you're proactive and willing to work on a solution. Always be polite and respectful in communication; remember, you are asking them for a favor here -- they don’t have to do anything to help you out. More bees with honey than vinegar. 

3. Prepare a repayment plan

When you talk to your creditor, come prepared with a proposed repayment plan that you believe you can realistically stick to. 

Here are some requests you can make to make repaying the debt easier for you:

  • reduced monthly payments
  • Lower interest rates
  • A workout agreement: this typically involves lowering or temporarily waiving interest rates. The bank may also be willing to take other steps to make it easier for you to keep up with your debt, including reducing your minimum payment and potentially waiving past late fees on your account.
  • Hardship programs: also known as hardship plans or assistance programs, are offerings by creditors to help borrowers who are experiencing financial difficulties. These programs are typically designed to provide temporary relief to borrowers who are struggling to make their payments due to unforeseen circumstances such as job loss, illness, or other financial hardships.
  • a lump-sum settlement: this is when you offer to settle your outstanding debt in one big payment that’s less than your balance. 

For example, you might owe $4,000 between charges, interest and fees on your credit card, but you ask the bank to accept $2,500 (your original credit limit) to settle the account in full. If the card issuer accepts, it will forgive the remaining balance.

There are two potential downsides to be aware of with this option.

One is that they could add a note to your credit report that the debt was settled for “less than the original balance.” This could be damaging to your credit score.

The other is that you might have to claim the forgiven debt as income on your upcoming tax return and potentially pay taxes on that amount.

4. Call your credit card issuer

Ask to speak with the debt settlement, loss mitigation or hardship department, because a general customer service representative won’t have the authority to approve your request. 

Once you’re connected with someone who has the ability to negotiate with you, explain your situation and make your offer. Be polite but firm.

5. Document everything

Keep detailed records of all communication with creditors, including phone calls, emails, and letters. You need a paper trail to point to so it doesn’t turn into a frustrating game of he-said, she-said. 

If you have a phone call, ask for an email address where you can confirm everything. Right after you hang up, summarize the phone call in the email and ask the person to confirm that this is what was said and agreed to so that you have something in writing. This will help you keep track of any agreements reached.

If you reach an agreement, ask for a document. You don’t have a deal until you have it in writing.

Final Thoughts

Stay positive! You may go through the effort of trying to negotiate your debts only to be hit with a flat-out “no.” Different banks have different policies on negotiating debts and based on your financial situation you may qualify for different opportunities. That’s okay - you did the hard thing, you called and you asked. Put it in your calendar to call and ask again in 6 months to see what is possible. 

Credit card debt holds you back in so many ways. Not only does it create emotional stress and anxiety, but it stops you from growing your money passively. I hope that this makes it easier for you to clear up your credit card debt so you can build a better financial future.

If you want our proven money management system, be sure to check out our free masterclass!

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