How do I negotiate with credit card companies?

Negotiating with credit card companies is a good idea for anyone who is having trouble keeping on top of their financial obligations. Especially in today’s economy when there are so many other people who are also facing the same problems, it is more important than ever to talk to your credit card companies and try to come to an understanding of some sort. Here is some advice to help you through the process.

Keep the Lines of Communication Open

The number one piece of advice given by most financial gurus when asked about credit card debt is that you must keep the lines of communication open. If you neglect to do so, you are setting yourself up for problems like a poor credit score which will hamper your efforts to negotiate with credit card companies and possibly prevent you from obtaining credit in the future. If you are struggling to make payments, tell the company (Click here to view a comparison of some of the best places to get free credit scores along with ongoing credit reporting).

Reasons to Negotiate with Your Credit Card Company

It will help your credit score. If you continually skip payments or make payments below the minimum without advising your credit card company of the situation you are in, you will find that such things will be reported to the major credit bureaus. What this means is that your credit score will likely drop. This makes it harder for you to obtain new credit and possibly harder to obtain a job or get reasonably priced car insurance.

Without open communications, your credit card company will assume you are trying to gyp them, therefore your account may be put with a collections agency. This is even more detrimental to your credit score.

By negotiating with your credit card company you may be able to make a deal that actually saves you money. Credit card companies simply want to get paid and they realize that many of those who are struggling to make payments are the same people who are at risk for facing bankruptcy, in which case an unsecured debt like a credit card will receive little if any reimbursement. It is to the company’s benefit to help out customers facing such situations.

Steps to Negotiating with Credit Card Companies

First, find a quiet and private place from which to make your phone call. Have enough time available to fully take care of the call. Do not make such calls with children in the room, at work where others can hear you and do not rush through the call.

Explain your situation thoroughly and unemotionally to the other person you are dealing with.

Firmly state what you can and will do in order to satisfy the debt. You know what you are capable of giving in order to pay off the cards.

Do not stand for bullying or high pressure tactics. You should also know that it is illegal for credit card representatives to strong-arm you.

If the credit card company is refusing to help, a simple threat of transferring the balance to another credit card should help them rethink their position.

The Things You Can Ask For

There are several things that you can ask for from your credit card company when you are negotiating with them. You can request that the interest rate that you are paying be lowered. Attempt to get no interest for several months followed by a rate at least half of what you are paying. Request a retroactive change in interest. Depending on the company, they may say yes. You can also request that they remove any late fees or over the limit fees that they have charged you within the last year. You can also ask them to stop charging you a yearly fee.

You may also ask the credit card company for a settlement agreement. What this means is that you will pay off the balance if they accept a percentage of it. Many credit card companies will agree to percentages of 30-60% of the original debt. Mark Brinker of Hoffman Brinker & Roberts, a firm specializing in renegotiating debt, advises that you may want to let the debt go past due a little before attempting this type of agreement, especially if you have always paid on time. This will help you get the best possible outcome. Be cautious with this approach, as not everyone supports this method.

Another important thing you can ask for is good credit bureau reporting. If you are past your due date for this month, request that they do not report it as such if you make your payment right away. Also, ask them to report “paid as agreed” to help preserve your credit score as much as possible when settling a debt.

Negotiating for a payment plan is also a great tactic when dealing with credit card debt. The company is typically reassured that they will get their money, albeit slowly. It is also better for your credit score than to continue making payments that do not meet the minimum required amounts.

The Importance of Speaking With the Right Person

While it is certainly important to learn how to write a credit card debt settlement letter it is crucial that you know how to go about getting what you want over the phone as well. If you are trying to negotiate with a customer service representative who keeps continually saying no to your requests, request to speak with a manager or supervisor. Often those in a higher position will have the authority to grant your requests but the representative you would normally speak with does not. It will also save time, as reps typically need to put you on hold and check with their supervisor. When you call a credit card company, start by asking the representative if she or he has the power to make changes to your agreement. If not, get transferred to someone who does.

Often the collections department of a credit card company is empowered to make the type of deals necessary to retain customers. Therefore, if you are struggling with dealing with customer service representatives, you might let your next payment go slightly past due, until a collections specialist from the credit card company contacts you. Deal with him or her directly regarding negotiations. Again, it’s always best to pay promptly and be responsible if you can. Using this method is only a strategy for negotiation.

Tips You Should Know for Negotiating With Credit Card Issuers

Make sure you get agreements in writing concerning changes in your credit card agreement. This is especially important if you negotiate prior to paying off the balance.

There are companies which exist that will do the negotiations with your credit card company for you. If you do not have the time, lack the skills to do so, are a poor negotiator and have a high enough debt to warrant paying a third party to get involved, this may be the option for you.

As companies raise minimum payments, increase interest rates and tighten their lending agreements in the midst of an economic recession it is becoming more and more necessary to negotiate with them or find a better alternative.

If you are tired of negotiating with your old credit card companies and are looking for other options, or to find the perfect card to do a transfer balance to so you can take control of your finances, try our free credit card “Chaser” tool. It will find the best card for you with the terms you want and need, in order to preserve your credit rating, often while even earning you rewards. Take just a few minutes and see what the credit card “Chaser” has for you. It may just save you a lot of time and money. Get started comparing credit cards today!