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Credit Card Settlement: How to calculate, negotiate, and close the deal?
If you are overburdened with your longstanding credit card debt, fed up of receiving harassing phone calls by your credit card issuing bank, want to get rid of debt collectors who threaten you at your home and office on a regular basis, and don’t know how to negotiate with bank authorities, then this article is for you. As you know that millions of people around the world are affected by credit cards due to their high interest rates that are beyond limits. Most of them are aware that credit card debt is the worst type of debt they have ever experienced but then also they keep on using credit cards because it is an easy way to buy any really expensive thing at once and when they have credit cards in their pockets, they feel like kings and it does not take them so much time to spend all the balance they have in their credit card, sometimes above the limits. When the limit gets exhausted and there is no money left to revolve, then the person finds out the problems that happen after using credit cards. Some people are able to pay the minimum amount due and they keep on paying it every month but then also their credit card debt keeps on increasing instead of decreasing and this is the primary reason why a person then decides to settle a credit card by paying off all the debt at once, but it is interesting to note that this is not so easy because the amount a person has in his/her pocket to pay in lump sum does not match the balance to be paid for settling the card. For example a person has got 1500 dollars to settle the card but the balance is more than 3000 dollars than what a person will do. Below I have listed some steps to be taken into account before settling your card. I have utilized these steps personally and they include calculating the debt and payments, negotiating the settlement, and finalizing or closing the deal.
How to negotiate debt?
Step by step instructions on how to calculate and negotiate credit card settlement:
- Call up your bank’s customer care and ask them to send all the monthly statements including all the payments you have done up until now on your credit card via email or post. In my case, I got them via email.
- After receiving the payment details, calculate how much you have paid first, like in my case my credit card’s limit was 85000 INR and I had already paid 67400 which was correctly reflected in my credit card statements. Now calculate how much you have really spent and how much interest the bank has charged and the what is the total outstanding according to bank. In my case, I had spent 87000 INR and the total outstanding was 111000 INR according to bank.
- Now minus the amount you have paid out of total outstanding according to bank. For example in my case, it was 87000 minus 67400 is equal to 43600. Now calculate what is the interest? Do you think the interest charged is legible? Do you have this much money to pay? Yes or no, it’s according to your wishes.
- Now in this step I will share my personal experience what I did. I stopped making all the payments for 3 months and whenever there was a call from the bank I kept on saying them that I have spent 87000 INR and already paid 67400. The balance amount is 19600 and the valid interest should be 9000 to 10000 INR. I told them that I can only pay 25000 and that also only once. First they said you have to pay total 111000, then only 95000, then only 75000, then 50000, then 35000 and when came to this figure, I tried to negotiate with them some and ended up at 29000. So we closed the deal at 29000 and I agreed to pay 29000 INR to the bank if the bank gives me the full and final settlement letter.
How to validate and authenticate credit card settlement letter?
But this does not end here. Because many credit card debt collectors generate fake debt settlement letters to make you fool, so read some important points below when settling your card by checking the authenticity and validity of your settlement letter:
- Make a deal with the bank executive on phone and arrange for a place to meet to settle the due.
- Never pay anything in cash when going for a settlement and don't give check also because then you will not receive the settlement letter in your hands and there are more chances of you being cheated by the bank executives.
- Create a demand draft from a bank for the same amount. You have to pay very minimum for making that draft. Don't worry about that small money. Paying your credit card debt in form of DD ensures the bank authorities also that the payment is done in real time and they have to issue a settlement letter at the same time because DD is just like cash. Keep a photocopy of your demand draft.
- If the bank executive says that please make the payment first and then we will give you the letter. You have to tell them no, I cannot do that. Keep insisting on getting the settlement letter at the same time you are giving the money in form of DD. Take the settlement letter in your possession first, check its authenticity, and then give the demand draft in the agent's hand.
- If the bank employee gives you the settlement letter than also check its validity by calling up that bank’s customer care and ask them if there is any settlement letter generated from your account and if the bank's customer care at phone says yes, then also confirm the reference number written on the settlement letter with the customer care on phone and double check all the details for example amount settled on your credit card, date generated of your settlement letter, etc.
Settle Credit Card Debt Easily without Filing Bankruptcy
So above was my personal experience on how to settle a credit card with proper calculation, negotiation, validation, and finalization of deal. These steps have helped me to pay off my debt and close my credit card. After this happened with me, I closed all my 5 other credit cards of different banks and now I am just doing cash transactions. I use debit cards for online shopping. I use paypal for making payments and receiving money. I have burned and thrown all my credit cards. I am really tension free and happy than I was ever.
Also read my personal story in full: Harassment on phone by ICICI bank DSA
What Happens If I Don't Pay Off My Credit Card Debt
SOME IMPORTANT POINTS TO REMEMBER
- It is important to note that credit card settlement and any other type of debt settlement depends on case to case and person to person.
- It is highly advised to consult your personal lawyer before initiating any settlement deal.
- Also you should keep in mind that credit card settlement done below what the bank requires can lead to credit loss.
- Credit loss can result in your not getting approved for loans in the future.