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
“What are you willing to give? … Find a number you're comfortable with and say, “this is what I can afford to give you,” period. They can take or leave it, it's your choice and not theirs.” Oftentimes, debt collectors will agree to accept as payment-in-full a lump-sum amount that is only a fraction of the total debt.
What do you say when negotiating with a debt collector? ›
“What are you willing to give? … Find a number you're comfortable with and say, “this is what I can afford to give you,” period. They can take or leave it, it's your choice and not theirs.” Oftentimes, debt collectors will agree to accept as payment-in-full a lump-sum amount that is only a fraction of the total debt.
What percentage will credit card companies settle for? ›
What percentage will credit card companies settle for? Creditors often accept 20% to 100% of the outstanding balance. The actual amount they are willing to settle for depends on individual circ*mstances and negotiation skills.
How to make a settlement with a credit card company? ›
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.
Can you work with credit card companies to reduce balance? ›
Credit card debt is typically unsecured debt, meaning a credit card company can't come after your assets if you fail to pay what you owe. Since credit card companies don't have this recourse, many are willing to negotiate a settlement with customers to recoup as much of the debt as possible.
What is the 11 word phrase to stop debt collectors? ›
If you are struggling with debt and debt collectors, Farmer & Morris Law, PLLC can help. As soon as you use the 11-word phrase “please cease and desist all calls and contact with me immediately” to stop the harassment, call us for a free consultation about what you can do to resolve your debt problems for good.
What not to say to a debt collector? ›
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 lowest a creditor will settle for? ›
Depending on the situation, debt settlement offers might range from 10% to 80% of what you owe.
How to clear credit card debt without paying? ›
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 percentage should you offer to settle a debt? ›
Offer a Lump-Sum Settlement
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.
Greg Regan, partner-in-charge at Hemming Morse's Forensic and Financial Consulting Services Group reported the following in February 2021: Debt settlement provided, on average, $2.64 in consumer savings for every $1 in assessed fees.
Is credit card settlement a good idea? ›
Debt settlement can eliminate outstanding obligations, but it can negatively impact your credit score. Stronger credit scores may be more significantly impacted by a debt settlement. The best type of debt to settle is a single large obligation that is one to three years past due.
What happens after 7 years of not paying debt? ›
The debt will likely fall off of your credit report after seven years. In some states, the statute of limitations could last longer, so make a note of the start date as soon as you can.
Can you negotiate a lower payoff amount on a credit card? ›
Negotiating, or settling, your debt means paying it off for much less than what you owe to your creditor. Just how much you pay is agreed upon by both you and your creditor, and typically there are professionals (often lawyers) who step in to help you come to this negotiated amount.
Will credit card companies forgive debt? ›
The only way credit card companies are likely to forgive the full amount of your balances is if you file bankruptcy. However, there are other ways to get out of debt in a reasonable amount of time. For example, you may be able to have a portion of your credit card balances forgiven with a debt settlement program.
What is the best debt settlement company? ›
Summary: Best Debt Relief Companies of May 2024
| Company | Forbes Advisor Rating | Best For |
|---|
| National Debt Relief | 4.5 | Best for Fee Transparency |
| Pacific Debt Relief | 4.1 | Best for Established Track Record |
| Accredited Debt Relief | 4.0 | Best for Quick Resolution |
| Money Management International | 4.0 | Best Nonprofit for Debt Relief Help |
3 more rowsMay 1, 2024
6 Steps for Negotiating With Debt Collection Agencies
- Learn About the Debt. By law, collection agencies must provide evidence that the debt is your. ...
- Understand What You Can Afford To Offer. ...
- Speak to the Debt Collector. ...
- Make Sure All Agreements Are in Writing. ...
- Make Your Payments. ...
- Negotiate Improvement to Your Credit Reports.
Offer a Lump-Sum Settlement
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.
What should I say when trying to collect a debt? ›
Ask open-ended questions.
Instead of coming straight out and asking, “Where is your account?” try “Will you be sending a check or paying by phone?” If they say “a check.” You respond, “That's fine.
What do you need to know before contacting a creditor to negotiate a debt? ›
Before calling, take a look at your budget and savings to determine if you can make a lump-sum payment up front. Once you have a plan laid out, you can then make your offer and establish your potential terms. Always make an offer that is less than the full amount you can afford. This leaves room for negotiation.
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.
