How to Negotiate a Credit Card Payoff
When you are experiencing financial difficulty it's a good idea to seek some type of debt relief such as negotiating a payoff or settlement. If you are not experiencing any financial distress and you can afford to make your payments then you may not want to negotiate a payoff. This shows up on your credit report as a settlement, and when other creditors review your report, it appears that you are or were experiencing financial trouble.
Other People Are Reading
Instructions
-
Negotiating Process
-
1
Call your credit card company and explain your financial situation. If you are unemployed, a credit card company will be more willing to accept a settlement.
-
2
Answer any questions that the credit card company asks. They may ask questions to help them assess your complete financial picture. Don't let them force you into payment arrangements or settlements you cannot afford.
-
-
3
Wait for the offer from the credit card company. If it looks like you don't have any resources at your disposal they will offer you a settlement which may be substantially lower than your outstanding balance.
-
4
Give a counteroffer to the credit card company. If your balance is $5,000 and they offer you $3,500 as a settlement offer you should counter with $2,000 or $2,500. The credit card company will probably accept your offer because they fear that they may not get anything. If you feel comfortable with the negotiations, offer even less money.
-
5
Get your settlement offer in writing before you send any money. Many offers have been made only to have the credit card company or a collection agency contact the debtor later asking for the remaining balance.
-
6
Negotiate to have your credit report improved. It's a long shot but you may want to see if the creditor will remove the bad credit information from your credit report. If they agree you want this in writing as well. If negotiations fail, the bad credit will stay on your file for seven years.
-
1
Tips & Warnings
If you negotiate for installment payments make sure you get some type of adjustment for a lower rate of interest on the remaining balance.
References
Resources
More Like This
Comments
-
landon1850
Dec 08, 2010
@ilovemesomehim I believe #4 refers to your credit balance, not credit limit. So #4 happens to be very good advice when you are negotiating your credit card payoff. -
ilovemesomehim
Apr 01, 2010
In response to tip #4, this is horrible advice. Asking creditors to lower your credit cards limits will increase your balance-to-limit ratio and ultimately decrease your credit score. Having a good cushion of available credit between your current balance and your credit limits on all open trades has a positive affect on your credit score because this cushion shows lenders that you are unlikely to overextend yourself financially. It's good to keep your balance-to-limit ratio under 15%. Anything greater can decrease your score. For example, a debt ratio of 16-29% can decrease your score by 3 points, 30-50% can decrease it by 18 points, 51-64% can decrease your score by as much as 24 points, and having over 65% balance-to-credit ratio may decrease your credit score by as much as 29 points. So think twice before making that call. It may even be a good idea to request an increase in your ...
