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
However, it's imperative to remember that it could have a negative impact on your credit score. What percentage will credit card companies settle for? Creditors often accept 20% to 100% of the outstanding balance.
What percentage will credit card companies settle for? ›
However, it's imperative to remember that it could have a negative impact on your credit score. What percentage will credit card companies settle for? Creditors often accept 20% to 100% of the outstanding balance.
Can you ask your credit card company to lower your debt? ›
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.
Does it hurt your credit to negotiate credit card debt? ›
Debt settlement typically has a negative impact on your credit score. The exact impact depends on factors like the current condition of your credit, the reporting practices of your creditors, the size of the debts being settled, and whether your other debts are in good standing.
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? ›
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.
Can you ask for forgiveness on credit card debt? ›
Credit card companies rarely forgive your entire debt. But you might be able to settle the debt for less and get a portion forgiven. Most credit card companies won't provide forgiveness for all of your credit card debt. But they will occasionally accept a smaller amount to settle the balance due and forgive the rest.
What is a strategy to get rid of credit card debt? ›
Paying off the smallest balance first
Then, there's the snowball method of debt repayment, which involves paying off the card with the smallest balance first and working your way up. The theory is that zeroing out a card balance provides a sense of accomplishment and encourages continued debt management.
Can the government help with credit card debt? ›
Unfortunately, there is no such thing as a government-sponsored program for credit card debt relief. In fact, if you receive a solicitation that touts a government program to get you out of debt, you may want to think twice about working with that company.
You never want to give the debt collector personal information about your finances and assets, such as your Social Security number, your bank account number unless making a payment, your income, or the value of your assets.
What do I say to creditors if I can't pay? ›
Explain your current situation. Tell them your family income is reduced and you are not able to keep up with your payments. Frankly discuss your future income prospects so you and your creditors can figure out solutions to the problem.
What is a reasonable full and final settlement offer? ›
Ultimately, a 'reasonable' amount to offer as a full and final settlement is whatever your creditors are willing to accept.
What percentage should I offer to settle 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.
What is the average credit card settlement? ›
In some cases, this is known as a discounted payoff (DPO). Depending on the situation, debt settlement offers only a percentage of what you owe, an average about 48% but in some cases, you may owe up to 80%. 12 The creditor then has to decide whether to accept.
Is it better to settle debt or pay in full? ›
Settling an account rather than paying it in full and on time signals that you're a risky borrower, which will be reflected in your credit score. Additionally, working with a debt settlement company often means halting payments to your creditor in order to gain negotiation leverage.
How much does the average credit card debt settle for? ›
In some cases, this is known as a discounted payoff (DPO). Depending on the situation, debt settlement offers only a percentage of what you owe, an average about 48% but in some cases, you may owe up to 80%. 12 The creditor then has to decide whether to accept.
What percentage should you 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.
What is the credit card settlement rate? ›
A typical credit card settlement percentage ranges from 30% to 60% of the outstanding balance. This means the credit card issuer agrees to accept a lump sum that is significantly less than the total owed, often contingent on the debtor's financial situation and negotiation skills.
What percentage should I offer a full and final settlement? ›
What is a reasonable Full & Final Settlement Offer? There is no set figure that constitutes a reasonable offer because it entirely depends on your financial situation, and the creditor. Very low offers may be rejected but if you can offer a significant portion of the money you owe, it is more likely to be considered.
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.
