According to a study conducted by credit reporting agency Experian, the average credit card balance in the US is over $5,000. The average credit utilization rate, the percentage of credit consumers use, was 25.3% in 2020.
If you rely on credit cards to pay your bills, you might feel like you’ll never get out of debt. However, there are some options that you can try to negotiate with your credit card companies to lower your debts. This can help you avoid getting adverse reports and improve your credit score.
Before you start negotiating with your credit card companies, it’s crucial that you first consider other debt-reduction options such as bankruptcy or credit counseling. These can help you get out of debt and avoid getting adverse reports.
If you’re not making timely payments on your credit card bills, then it’s possible that the company won’t be able to negotiate with you. This means that you might have to consider other options. One of the most critical factors that the credit card company will consider is your financial capacity. This could be a lump sum or a monthly cash flow.
Negotiating with your credit card companies can be difficult because many will be reluctant to change their terms even if you plan on filing for bankruptcy. If you’re planning on negotiating independently, make sure you’re prepared to do so.
Know What You Owe
Before you start negotiating with your credit card companies, it’s vital that you first confirm the amount of money that you owe. Doing so will allow you to make an informed decision regarding the terms of your agreement.
Explore Options
You should also consider the various options that you have available to you. One of these could be a lump-sum settlement or a hardship agreement.
Call Your Credit Card Company
If you’re planning on negotiating on your own, make sure that you contact the credit card company’s debt settlement or loss mitigation department. This will allow you to speak with a representative with the necessary skills to negotiate with you. After you’ve connected with someone who can help you, make an offer and explain your situation.
Decide on Your Terms
If you’re planning on filing for bankruptcy or hiring a debt management company to help you, make sure that you clearly understand the terms of the agreement. After you’ve given the card issuer your word that you’re willing to work things out, be prepared for them to close or freeze your account.
Take Thorough Notes
If you’re not planning on recording the call, make sure that you take the necessary notes. Some states also require that you notify the card issuer about your actions, though you can still opt to do so. If you’re not satisfied with the company’s terms, make an offer to them and ask for a supervisor.
Ensure the Final Agreement Is in Writing
Before you start negotiating with your credit card companies, you must have the final agreement in writing. This will allow you to make an informed decision regarding the terms of the contract.