If you’re like most people, you probably have credit card debt that you wish you could eliminate from your life as soon as possible. Credit card companies can be relentless, even if you’re already paying off your balance each month. Luckily, there are several ways to negotiate with your credit card company so that you can get rid of that debt quicker and save money in the process. Here are six tips to help you start negotiating with your credit card company today!
1) Educate yourself
Before you even think about negotiating with your credit card company, it’s important to educate yourself on your rights and the options available to you. The first step is understanding that you have the right to negotiate. Second, learn about debt settlement and how it works. Third, find out if you’re eligible for a hardship program. Fourth, know what you can realistically afford to pay. Fifth, understand the different types of settlements.
In some cases, credit card companies will help you pay off your debt by reducing your monthly payments. This is a good way to start because it gives you an immediate sense of relief as you watch your debt get paid down over time. Another option is to go on a hardship program, which means that credit card companies will agree to reduce interest rates and fees in exchange for timely payments. As you learn more about how debt settlement works, don’t be afraid to ask questions and challenge anything that seems unfair or misleading.
2) Don’t wait until you have a large sum of debt
Many people wait until they have a large sum of debt before they try to negotiate with their credit card company. However, this is often not the best strategy. It’s better to start negotiating when you first start accumulating debt. That way, you can get lower interest rates and better terms. You may also be able to settle your account for less than what you owe.
Don’t think of it as a sign of weakness. Rather, you are showing strength by admitting your debt and trying to work it out. In fact, credit card companies may be more willing to negotiate when you have smaller amounts of debt than when you have larger amounts. They want to keep their customers happy, so they may be more amenable if you call them and start negotiating while your balance is still relatively low. You will also be able to focus on several accounts at once instead of just one or two if your balance is higher.
3) Don’t use your emotions in negotiation
It can be difficult to not let your emotions get in the way when you’re trying to negotiate with your credit card company. After all, this is money that you may have worked hard for. However, it’s important to remember that the credit card company is a business, and they are not going to be sympathetic to your emotional pleas. Be professional, calm, and collected when you are negotiating with them.
Even though you should try to keep your emotions out of negotiation, it is a good idea to understand where they are coming from. You’re dealing with someone who can make some decisions that will greatly affect your life and finances. This isn’t something to take lightly, so it’s natural that you would feel a little upset about their calls or emails. However, remember that their goal is simply to make money—and in most cases by collecting interest off of debtors like yourself. If you can remember that, it may help you not feel as though every call from them is an attack on your character.
4) Know when to use a debt management program
A debt management program is a formalized process between a debtor and creditor. The program can last anywhere from two to five years, and during that time, the debtor agrees to make monthly payments to the credit counseling agency, which then distributes the funds to creditors. There are several things to consider before enrolling in a debt management program, such as whether you can afford the monthly payments and if you’re willing to give up your credit cards. If you decide a debt management program is right for you, there are a few tips to keep in mind when negotiating with your credit card company. First, remember that you have options. If one company isn’t willing to work with you, there’s a good chance another will be.
If you’re thinking about enrolling in a debt management program, start by calculating how much you can afford to put toward your debt each month. There’s no set rule when it comes to what percentage of your income you should allocate toward your debt, but in general, you should aim to pay as much as possible. Ideally, more than 50 percent of what you earn after taxes and household expenses will go toward paying off debt. Remember that even if a company has an affordable monthly payment option on paper, it may not be realistic for your situation. In some cases, companies are willing to work with high-debt clients who have inconsistent income or low credit scores by setting payments based on their ability to pay them each month instead of their total debt balance.
5) Talk to the right person
The first step is to call your credit card company and ask to speak with the retention department. This is the department that’s responsible for keeping customers from leaving, so they may be more willing to work with you. Be polite and honest about your situation, and explain that you’re considering cancelling your card unless they can lower your interest rate.
If you’re unable to get a lower interest rate, try negotiating a compromise. For example, if you can’t agree on an interest rate reduction, see if they’ll agree to close your account and reopen it after 6 months with a lower balance. This is often referred to as debt consolidation or restructuring. If you have more than one credit card balance, try getting them to drop all of your balances into one account and negotiate an overall lower interest rate. It may seem like you’re getting nothing in return for doing them a favour, but it could save you hundreds or even thousands of dollars over time.
6) Know what they want
The first step is to know what your credit card company wants. They want to get paid back, and they want to do it as quickly as possible. The sooner you can pay off your debt, the better. They also don’t want to have to deal with you defaulting on your payments. So, it’s in their best interest to work with you to come up with a plan that works for both of you.
Of course, you need to be reasonable as well. You don’t want to propose a payment schedule that puts you into hardship and will result in your defaulting on payments. You also don’t want to do anything that would damage your credit rating. It’s a fine line, but if you can find a way to appease them, you may be able to get yourself out of debt faster and with less stress.