Negotiating Your Credit Card Balance, Part 1

01 Sep Negotiating Your Credit Card Balance, Part 1

Have you ever tried to negotiate with your credit card company?  Perhaps you want to reduce the interest rate, or make a deal on the balance owed.

Reducing the interest rate, if you’re in good standing, is relatively easy; especially if you’re receiving offers from other companies to transfer your balances.  Under those circumstances, simply call your credit card company and explain to them that you’ve received an offer to transfer your balance. Usually your company will find a way to keep your business by reducing their interest rate to be competitive.

But, negotiating with the credit card company when you’re behind, and your interest rate is going up, is a different matter altogether. Don’t expect them to be particularly sympathetic. Their position will be that they lent you the money to buy whatever it was you used the credit card for, and now you should pay them back. Never mind that they’re now charging you 25% interest plus late charges causing the $200 purchase to become $1000 in debt!

If you are trying to negotiate your balance remember that credit card companies will almost never take payments on a reduced amount.  They may, however, lower the balance for a cash settlement, particularly if you’re behind and have missed a couple of monthly payments.  Unless you’re going to pay them a significant portion of the debt, however, they’ll transfer the account to their collection department or an outside collection company. Curiously, once that happens, you have a better chance of negotiating!

In part 2, I’ll give you some hints about negotiating with a collection agency or department.

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Douglas Jacobs is a California bankruptcy attorney and partner in the Chico law firm of Jacobs, Anderson, Potter & Chaplin. Since 1988, Mr. Jacobs has taught Constitutional law and Debtor-Creditor/Bankruptcy law at the Cal Northern School of Law. He has served as Dean of Students since 1994. He is a frequent lecturer on the subject of consumer bankruptcy law, and has spoken at both state and national levels.
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