How To Negotiate Credit Card Debt Reduction
Many people wonder "how can I negotiate credit card debt reduction?" If this question has crossed your mind, then it's likely that you have had some financial problems, and perhaps your credit cards are maxed out to their limits and are running up huge amounts of interest each month. Credit card debt may have even been the main reason that you got into financial difficulty in the first place. It's too easy for many of us -- a credit card is the easiest way to pay for something, especially for shopping online. And often these days if we don't have the cash on hand to pay for something, we get our our card to purchase it. Sure, we often reason that we can pay for it in small monthly payments later. But then emergencies come up, and other purchases, and very soon you can max out your credit card limits. And once you fall into the trap of only making the minimum payment each month, the interest keeps growing and no end seems in sight. However, with a little knowledge you can often negotiate a credit card debt reduction to help make reducing your debt easier to pay off.
If you have been wondering "can I negotiate credit card debt reduction" then I hope that you find the information below helpful. It seems that financial institutions have been very willing to give out more and more credit cards to people who really don't need them, and the banks also have been very willing to increase spending limits. So it really appears that banks have been encouraging people to purchase items that they can't really afford. On reason for this may be that banks make huge profit margins by changing late fees and over the limit fees to folks who become unable to pay all of their bills on time. Plus, things have changed over time, from "pay at the pump" gas stations to online Christmas shopping, where it is easier to pay with credit cards than to pay by cash. And often we in the U.S. are using credit cards to buy things that we didn't really have the money in our budgets to buy in the first place. We've gotten used to getting what we want immediately, regardless of whether we really need it.
So, what are alternatives to using credit cards? First, it is best to cut up all of your cards (except perhaps one to hide for emergencies). That way it will be impossible to continue to use them, and that is the first step to stopping your debt from increasing and taking control of your finances. If you keep one card for emergencies, put it somewhere where you can find it, but where it will not be with you while shopping and will be inconvenient to get to so that you are not tempted to use it.
O.k., so you've cut your cards up, but what about ways to reduce the credit card debt that you already have? You can negotiate with credit card companies basically 2 ways: (1) do it yourself; and (2) use a credit counseling service to do it for you. Let's discuss those in reverse order:
- Credit Counseling Services -- Usually charge you some kind of fee -- often at the start and then usually for handling each payment. Many folks say that you can negotiate just as well yourself, but these folks do this every day, and they do the negotiations for you, so there can be value in these services.
- Negotiate Credit Card Debt Yourself -- call each creditor and explain why you are having trouble making payments. If you are considering bankruptcy as an alternative, tell them that too (unsecured lenders like credit card companies can lose a lot if you file bankruptcy). Tell them you'd like to set up a payment plan where you lower your interest rate and don't have any other fees (like over-limit). If you had a good payment record, but only recently had trouble making payments, remind them you've been a good customer and tell them what changed (loss of job, medical bills, etc.). My rule of thumb is that you usually have to go up 2 levels from the first person you talk to on the phone in order to get someone with authority to give you a good deal. So, if you don't like the first offer they make, politely ask to speak to their supervisor. However, with all of the recent financial hardships out there (and bank bailouts) banks seem to be more willing to even let lower level employees give more generous payment terms.
Please note that either of these options could have some ramifications on your credit score, but generally it is better to do these than continue to pay late or miss payments. Both ways, you can also request for some late fees and penalties that you already accrued be removed from your account.
Another option for the question of how can I negotiate credit card debt reduction would be to get a debt consolidation loan. Debt consolidation loans allow you to consolidate all of your credit card debt under one loan, usually with much lower interest rates (and they usually don't increase your interest rate when you are only a few days late with payment). If you can get one of these, they are usually better deals than you (or Credit Counselors) can negotiate -- but be sure to read the details of the loan carefully.
In conclusion, credit cards make it far too convenient for us to purchase items that we don't really need and can't really afford. By taking steps to avoid using credit cards, and negotiating credit card debt reduction and for better payment terms (or getting a consolidation loan), you can get out from under your credit card debt and get on the road to a better credit score.
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