How to negotiate down your Credit Card Debt

Here is a guide to executing credit card negotiations with creditors on your own

Credit card negotiations may seem more like a myth than reality to many Canadians in debt. Some people seem to think that their credit card conditions are rigid. They feel they’re stuck with the interest rates on their bill and have no room when it comes to fixing any issues they might have.

Here’s some good news: you are on a two-way street when it comes to credit card issuers. Armed with a strategy and useful negotiation techniques, you can set yourself up for a much better situation that will save you money in the long run, and help improve your credit profile.

People often look for expert help when it comes to negotiating big-ticket items like buying a house; dealing with your creditors might be no different. If you feel up to the task, review the tips below, and they may help you make some headway with your lenders. If you need more assistance, call Consolidated Credit today for free at 1-888-294-3130 to speak with a trained credit counsellor or get started online with a request for a Free Debt Analysis.

How to establish goals

Before you call your creditor, you must know exactly what you want. Negotiating with creditors is a dynamic process, and there is no set conclusion at the end of a call with your creditors. When you consult with your creditors, you can negotiate:

  • To lower your interest rate if you are a customer in good standing.
  • For the removal of penalty fees and penalty interest charges when you fall behind on payments.
  • A fresh start (known as “re-aging”) on a delinquent account, including forgiven late payments, eliminated interest charges from paying late, and removal of harmful activity from your credit report.
  • To temporarily adjust your payment schedule if you are unable to make the scheduled payments on your account.

Your goals may differ from card to card. Negotiate with as many or as few creditors as you need to reach the desired results.

How to negotiate credit card debt

Having goals and knowing what you want is the first step to getting out of debt, but it won’t guarantee that the creditors will automatically sympathize with you. Prepare for pushback and resistance from your creditor, and keep these good options in mind when you negotiate a settlement:

  • Have an accurate household budget on hand to help you state your case.
  • Be calm and concise during the negotiation process; don’t let emotion get in the way.
  • If you were a responsible debtor but fell into delinquency due to job loss, recession, or a medical issue, make that clear to your creditor.
  • Some people are more empathetic than others. If your first representative refuses to negotiate, thank them for their time, collect yourself, and call back later to speak with a different representative.
  • Be open to compromise, but don’t give up too much ground, or you will get nothing out of the negotiation. In the end, it has to be a result that works for you.

This last point can be confusing to people because there is no absolute right or wrong answer for how much you should compromise. What do you want to gain? What can you afford to lose?

For example, if you’d like to temporarily adjust your payment plan schedule, your lender may also wish to lower your credit limit. In this case, it would be an acceptable result because you get the lower payments you desire, while the creditor gets some assurance that you’re serious about getting back on track.

What to do if your credit card negotiations fail

Do not despair if your creditors refuse to accept your debt negotiation terms. They are expert negotiators, and it may be time to get expert negotiators on your side.

You may be able to accomplish your goals by enrolling in a debt management program (DMP). Also known as a debt management plan, it allows your representatives to conduct credit card negotiations with creditors on your behalf to decrease interest rates and also decrease the amount you pay each month.

Your credit counsellor may also be able to negotiate with creditors to remove penalties and reduce or eliminate the interest applied to your debts. So, if you feel like you are in over your head and your negotiation efforts have failed, know that a debt management program may provide some of the benefits you were hoping to achieve.

A trained credit counsellor is an expert at working with creditors and negotiating with them on behalf of consumers. If credit card negotiation on your own has failed and you need help, give us a call at 1-888-294-3130 to speak with one of our trained credit counsellors to get started with a Free Debt Analysis.

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