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It is possible to negotiate credit card debt. But it does depend on whether the card issuer is willing to work with you. Creditors are reluctant but may be willing if you've missed payments and they doubt you can repay what you owe.
Negotiating credit card debt does have consequences. It can negatively affect your credit score and potentially result in the closure of your credit card account.
In this guide, you'll learn how to negotiate credit card debt, the impact it can have on your credit, and how to decide if it's the right solution for your situation.
Negotiating credit card debt is a last resort. Before you jump to that, you should see if there are any other options available.
Start by going over your monthly spending to see how much you could realistically put towards your debt. If you can reduce expenses and put together a plan to pay off your debt, that's a better way to go.
Find out whether debt consolidation or refinancing could be possible. This is more likely if you have a good credit score. Two popular options that can get you a lower interest rate on your credit card debt are:
If you can't pay off your debt and you need to negotiate, figure out what kind of deal you want to make with the credit card company. You could ask for a repayment plan with a lower payment amount, interest rate, or both. You could offer a lump sum payment to settle your debt.
The right choice depends on your financial situation. It's important to think about this before you contact your card issuer so you know what to request.
Here's how to negotiate credit card debt:
There are a few different kinds of agreements you could come to with the card issuer. The most common include:
You may have heard of debt settlement companies that charge a fee to negotiate credit card debt for you. That may seem useful, but you don't need a debt settlement company to come to a deal with your credit card company. You can call, make a proposal, and go back and forth with the card issuer until you have an agreement.
Negotiating credit card debt can hurt your credit, which is why it's best to consider other options first.
If you've missed any payments, your credit score will already have taken a hit. And credit card companies often won't negotiate credit card debt until you've been late on paying your bill.
Here are the ways negotiating credit card debt can affect your credit, depending on the type of agreement you reach with your card issuer:
The good news is that after you negotiate your credit card debt and fulfill your end of the agreement, you won't have additional late payments or high balances recorded on your credit report. With no new negative information being posted, you can start to rebuild your credit.
When there's no reasonable way to repay what you owe, negotiating credit card debt can be a good solution. But you should think carefully about whether there are any alternatives available. Go into debt negotiation with open eyes and an understanding of what will happen to your credit. Then you can make the most informed choice about what's right for you.
Here are some other questions we've answered:
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