A few years ago, when I had over $15,000 of credit card debt, I was often negotiating with credit card companies to get better interest rates.
I took a very active approach toward minimizing my interest expense on my debt and learning to negotiate with credit card companies was a key component.
Like I’ve mentioned before, I am a big fan of the debt snowball method for getting out of debt and you actually can use this as another tool to speed up the debt reduction process.
The steps to bargaining with your credit card company
These are the steps that I actually took when I was trying to negotiate with my credit card companies.
1Gather credit card offers
I gathered up a bunch of offers from other credit card companies. I would often get 0% credit card offers in the mail, so I just saved them up for a couple weeks until I had a few decent ones that I was slightly interested in. The reason I gathered these up was to have a baseline to negotiate from. These offers would more or less allow me to prove to my credit card company that I didn’t need them, because I had other offers. I could have made these offers up, but I don’t believe that lying to get what you want is ever justified – even to credit card companies. 😉
If you don’t have any, you can just find some of the 0% balance transfer offersand use those as negotiating leverage.
2Organize and make a list
From this point, I would make a list of all of my credit cards, the balances on each, the current interest rate and how long that rate would last (if it were a promotional rate).
3Call the first card company and try to reach the supervisor
Then I would grab the phone number off the back of the first card and start calling. (This is very important) Once I reached a customer service rep I would ask to speak to their supervisor. You can try to negotiate a better rate with the front-line rep if you want, but in my experience they rarely can negotiate rates with you.
Most of the reps I dealt with flat out told me “no”. Either way, ask for their supervisor. Once you are talking to the supervisor, you are now talking to someone who has authority to negotiate rates (most times) and they often are much more rational and will talk to you like a human being.
4Plead your case
Now that I had the supervisor on the line, I would argue my case in typical Matlock fashion. 😉 I would let them know that while I have enjoyed their business, I had three 0% offers from other credit card companies.
I told the supervisor that I would love to stay with them, but if they couldn’t provide me with a better rate I would be forced to go with one of their competitors.
Just like you would expect, this worked with varying degrees of success each time. Sometimes they would offer me 0% for a fixed time frame, sometimes they would try to pacify me with a 1% rate reduction. But I will say that they ALWAYS offered me something. So even if I didn’t get what I wanted, it was always better than not calling at all.
I know not everyone will be offered a discount, but you never know until you ask!
5Transfer your balance if you need to
I had patience and was not afraid to leave, so if I couldn’t get the offer I wanted from the supervisor I would just kindly hang up and proceed to transfer that balance to one of the offers I rounded up in step 1.
6Get the best offer by closing your account
Once I had my balance transferred, I would call back to that card company to close my account. Many of the credit card companies have “closing specialists” whose only job is to do any and everything to keep your business. You can ask these guys for a ride on a unicorn and they will try to make it happen if it means you will keep your account open.
I found that these guys often will be able to offer you a better deal than anyone else, because they know you mean business. I rarely took advantage of their deals, because I had already transferred my balance, but it is something to keep in mind.
So there you have it – my quick how to guide to negotiate with credit card companies. I assure you that you will have varying degrees of success based on your credit history, payment history, and other factors, but it never hurts to try. Oh and by the way, this is the same method I use when trying to negotiate late fees or any other charges from them.
Homework:
- Gather up some 0% balance transfer offers that you have gotten in the mail, or find other balance transfer credit card offers for negotiating leverage.
- Then follow the steps above to negotiate lower rates.
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FAQs
If you can't pay off your debt and you need to negotiate, figure out what kind of deal you want to make with the credit card company. You could ask for a repayment plan with a lower payment amount, interest rate, or both. You could offer a lump sum payment to settle your debt, such as 25% to 50% of the amount owed.
What percentage will credit card companies settle for? ›
Typical debt settlement offers range from 10% to 50% of the amount you owe. Creditors are under no obligation to accept an offer and reduce your debt, even if you are working with a reputable debt settlement company.
Can I ask my credit card company to lower my payment? ›
With a workout agreement, you can ask your credit card company to do the following: Waive or reduce the minimum monthly payment. Lower your interest rate. Remove past late fees.
Can I call a credit card company and settle? ›
If you find yourself in too much debt to keep up with, you might be able to negotiate with your credit card issuer to settle some of your debt. Debt settlement works by negotiating with an issuer until they agree to let you pay off part of your debt in exchange for forgiving — or settling — the rest of it.
Does negotiating with creditors work? ›
It is possible to negotiate directly with creditors and settle your debt for less than you owe, but you may want the help of a professional. A quick counseling session from a certified credit counselor can help you discover your options and choose the right path forward.
What is a good settlement offer for a credit card? ›
What is a good settlement offer for a credit card? A fair settlement offer typically falls between 30% and 50% of the total amount owed. However, it's imperative to note that this can vary based on several factors, including how delinquent the account is.
What is the lowest a debt collector will settle for? ›
Some will only settle for 75-80% of the total amount; others will settle for as a little as 33%. Looking for a place to set the bar? The American Fair Credit Counsel reports the average settlement amount is 48% of the balance. Again, start low, knowing the debt collector will start high.
How to stop paying credit cards legally? ›
Legal Ways to Cease Credit Card Payments
- Debt Settlement. Debt settlement is a process that involves negotiating with creditors to pay less than the full amount you owe. ...
- Debt Management Plan (DMP) ...
- Bankruptcy.
You may be able to secure a 0% APR offer by requesting one from your credit card issuer. Offers are generally for balance transfers, but some issuers also offer pay-over-time plans or credit line loans. Using your card responsibly and negotiating a retention offer can increase your chances of getting a 0% offer.
How to pay off credit card debt when you have no money? ›
- Using a balance transfer credit card. ...
- Consolidating debt with a personal loan. ...
- Borrowing money from family or friends. ...
- Paying off high-interest debt first. ...
- Paying off the smallest balance first. ...
- Bottom line.
Explain the reason for your inability to repay the entire outstanding amount on your Credit Card. Based on your situation, current income level, and their terms, your Credit Card issuer will agree to a settlement where you pay a lump-sum amount or work out a scheduled repayment plan.
What is typical credit card settlement? ›
The percentage of a debt typically accepted in a settlement is 30% to 80%. This percentage fluctuates due to several factors, including the debt holder's financial situation and cash on hand, the age of the debt, and the creditor in question.
How to wipe credit card debt? ›
Outside of bankruptcy or debt settlement, there are really no other ways to completely wipe away credit card debt without paying. Making minimum payments and slowly chipping away at the balance is the norm for most people in debt, and that may be the best option in many situations.
What should you not say to a creditor? ›
Don't provide personal or sensitive financial information
Never give out or confirm personal or sensitive financial information – such as your bank account, credit card, or full Social Security number – unless you know the company or person you are talking with is a real debt collector.
What is the 11 word phrase to stop debt collectors? ›
Use this 11-word phrase to stop debt collectors: “Please cease and desist all calls and contact with me immediately.” You can use this phrase over the phone, in an email or letter, or both.
What percentage will creditors settle for? ›
Some want 75%–80% of what you owe. Others will take 50%, while others might settle for one-third or less. If you can afford it, proposing a lump-sum settlement is generally the best option—and the one most collectors will readily agree to.
How much does the average credit card debt settle for? ›
Although the average settlement amounts to 48% of what you originally owed, that number is a bit skewed. If your debts are still with the original creditor, settlement amounts tend to be much higher. You can end up paying up to 80% of what you owe if the debt is still with the original creditor.
What is the credit card settlement rate? ›
Credit card settlement percentage refers to the portion of your outstanding debt that a credit card company agrees to accept as full payment. For instance, if you owe Rs. 1,00,000 and the company agrees to a 60% settlement, you'd pay Rs. 60,000 to clear your debt entirely.
What is a reasonable offer to settle a debt? ›
What Percentage Should You Offer to Settle Debt? Consider starting debt settlement negotiations by offering to pay a lump sum of 25% or 30% of your outstanding balance in exchange for debt forgiveness. However, expect the creditor to counter with a request for a greater amount.
Is it a good idea to settle credit card debt? ›
If you're behind on your credit card payments and looking for a solution, you might be considering debt settlement, which promises to help clear your debts. However, debt settlement is risky and should be a last resort for most borrowers.
A few years ago, when I had over $15,000 of credit card debt, I was often negotiating with credit card companies to get better interest rates.
