There could be many reasons that you have excessive credit card debt. You might have suffered a sudden job loss or had large medical bills that you just couldn’t pay, but the result is the same.
You are under a lot of stress to pay off your credit cards and get back in control of your financial future. Knowing how to negotiate credit card debt can be a very useful tool in managing and repaying the money that you owe.
Know Where You Stand
The first step in successfully managing your credit card debt is getting organized. This means sitting down and completing a list or a spreadsheet to compile all of the information about your debt. This might be the last thing that you want to do but it really will be helpful. Don’t look at it as a huge pile of debt looming over you, look at it as a way to determine your total debt and the first step in your successful plan of attack for eliminating the monster. You will need to include the name of each credit card company, the amount that you owe, the current interest rate that you are paying and the customer service contact information. Also include a section of notes for each account where you can enter information such as a special offer that you might be using such as zero interest for six months. Finally, add a note about how many on time payments that you have made on the card in the last year. This could be a good negotiating tool. This will let you look at all of the debt in one place and determine which are costing you the most on interest.
Pick Your First Target
It can be tempting to select your largest debt and call them first but you will want to start small and perfect a few skills before you go after your larger balances. The most successful negotiations are going to revolve around lowering your interest rate and removing any annual fees from the account. Credit card companies don’t just give away money and they are not going to reduce the amount that you owe in most cases. So call customer service and request an interest rate reduction. It is very helpful to state your current balance, interest rate and the number of on time payments that you have made on the account. It lets the representative know that you have your information together and are serious. If they decline to lower your rate, then tell them that you have better offers on other cards and are considering closing this account if they are not willing to work with you. If they still refuse then ask to speak to a supervisor or manager. Many times the manager is the only one who can adjust rates. Repeat your account information and your request in a polite manner. And explain that you would like to continue the business relationship but only if the company values your business and is willing to work with you and reward you for your loyalty and good payment history. If they continue to resist then thank them for their time and ask for the correct process to close the account after you transfer your balance. Add that info to your notes section and then follow through and close the account.
Be Aware Of Tricks
When you are negotiating for a lower rate one of the customer service tricks is to give you something but not what you are asking for. They will be quick to offer you an increase in your credit limit or maybe an upgraded account with better rewards but that is not what you want or need. Don’t be distracted with useless benefits. Also, don’t let them tell you that they will submit your account for a review to lower the interest rate. That is just a way to get you off of the phone and you will never get anything for your effort.
Be Willing to Invest Time
When you start the negotiation calls, you might think that a few minutes per call will get you the results that you are looking for. But in reality, you will spend more like 30-40 minutes with each lender. This is not a lot of time when you think about the results that you could potentially get. Saving even $50 a month on interest is a big deal over the course of several months and to do that on 3 or 4 credit cards could mean that you are saving over $1,000.
Respect the Customer Service Representatives
If you have never worked in customer service then you might not realize what a day in the life is like. But stop and think about it for a minute, no one calls unless they have a problem. So, as a rule, no one is happy when they call and that can also mean that no one is polite or pleasant. You can be that one person who is kind, considerate and nice to the rep on the phone. This will go a long way to getting the results you want. Not every rep can change your rate but they can offer information about who can, the process and tips to get what you are looking for. And all it might take to get the information is a pleasant comment and asking how their day is going. Getting the first customer service rep on your side is a huge win for only the price of a moment of polite conversation. Learning how to negotiate credit card debt is an important tool in managing your debt and your finances. It gives you the ability to get more impact out of every payment that you make. It also helps you to reduce your debt load more quickly and to improve your credit score. Start small and after a few modest successes, then you will be ready to tackle your largest debt with confidence.