How To Negotiate Lower Credit Card Payments

It is no secret today that the rampant use of credit cards has landed many people in trouble. Many people have spent their way to their limits and as the economy and job market have tanked, hundreds of thousands of people are running or have run their cards up to their limits.

It starts out simple enough. You find yourself a little short one month so you take a cash advance. Then you need a bit of a float until your next paycheck maybe to buy some groceries so ka-ching, that goes on your card. Little by little your balance starts to explode and you find yourself only able to make the minimum payments.

Then, wham, you get a letter in the mail from your card company stating that they are increasing your interest rate from 9.99% to 25%. You’re stuck. You feel helpless and don’t know where to turn for help, but you do know that all of a sudden you won’t even be able to make the minimum payments.

Do not feel alone in this. As we mentioned there are potentially millions of people in the U.S. alone who are finding themselves in the same boat as you. Believe me, the credit card companies know this.

The first thing you need to do is stop using your card. You need to stop the bleeding before you can look for a solution. It may be tough but your card company will be a bit more willing to work with you if you stop adding to your balance.

Next you need to sit down and write down a budget. You need to put down on paper everything you bring in and list every outgoing expense that you have. Hopefully you will not end up with a negative number here meaning your outgoing expenses are more than your incoming cash.

Either way once you have this information you are ready to call your card companies. Most of the larger credit card issuers are being inundated with calls like this so they certainly will not be surprised to hear from you.

Do not be scared to make this call. Simply explain your financial situation to the card company and tell them what you think you will be able to afford. Ask them to cut your interest rate or put a hold on any interest rate increases until you get caught up.

Remember to remain calm and professional. This is a negotiation and if you come off as professional and respectful you are more likely to win the terms you are looking for. Realize that the card company will probably not accept your first offer. They may counter with something that will split the difference on what you are looking for versus what they are willing to accept. You may want to start with a number lower than what you are ultimately willing to accept.

Only you know the number that will make it work for you. If you run into a complete brick wall and your card company is just absolutely unwilling to work with you, this is where you may want to take one last shot. What I mean is if you have already spoken to a supervisor and everyone has said no, it may be time to break out the Chapter 7 card.

We want to stress that this should only be used if you get stonewalled and have gotten nowhere. You can politely tell the supervisor that due to the fact that you just simply will not be able to comply with their payment terms, you will be forced to stop paying altogether and consider Chapter 7 bankruptcy. This will get their attention as if you were to do this, they will likely end up with nothing. So of course at this point they would prefer to work with you to get something as even 50 cents on the dollar is better than nothing.

The only time you may not want to consider using this tactic is if you have other accounts with the card issuer such as a savings or checking account with money in them, as those accounts could be attached if you were to stop paying your credit card bills.