When you find yourself buried under a lot of debt, it's time to prioritize. You might find that most of your budget to pay down debt is going to college loans, a car loan, or some other big expense. In this case, you might want to figure out a way to pay less on your credit cards to free up money for other bills. The first thing to do is contact your credit card companies. Often, it’s possible to negotiate lower minimum payments by approaching a credit card company, though this doesn't always work.
When you approach a credit card company to negotiate a lower payment, the creditor has the right to refuse to negotiate with you. Although many credit card companies adopt a problem-solving approach with customers, the creditor has no obligation to work with you. Keep this in mind before you call the credit card company so you will know the right way to approach your request for a lower payment.
Reasons for Refusal
When you ask a credit card company to adjust your payments or interest rate, the creditor will review your account and your credit score. If the review turns up negative information, such as a history of late payments, the creditor might deny your request. It’s common for credit card companies to refuse to negotiate with consumers until an account goes into arrears for 60 or 90 days. If you are thinking about using the services of a debt settlement company to attempt to negotiate with a credit card company, the creditor might take a hard line against your approach and refuse to negotiate altogether, warns the Consumer Financial Protection Bureau. And because methods used by debt settlement companies often involve stopping payments on your credit card account, using a debt settlement company could result in a negative hit to your credit score and hefty penalty fees. Whenever possible, avoid taking steps that can negatively impact your credit score because this can make it difficult to get home loans and other types of credit.
You have a better chance of success if you prepare yourself prior to contacting the credit card company. Review your financial situation and plan your request carefully so you can present it with confidence. Explain your circumstances and ask for an adjustment to your account that will reduce your monthly payment. Typically, this will involve an interest rate reduction. As you negotiate with the creditor, don’t be afraid to ask questions and push for what you need. Credit card companies may give in and make settlements with customers who have strong negotiating skills.
If you hear “no” from the credit card company, you might still be able to work a deal. Mention the possibility of transferring your balance to a different credit card that will give you lower interest rates, suggests Consumer Reports. In many cases the credit card company would rather reach a deal with you than lose your business. This negotiating tactic might not be effective unless you have a solid credit score to back up your threat, however. The lower your credit score, the less negotiating power you have. Remain persistent if you don’t get what you need at first, and don’t be afraid to call back repeatedly. You can also ask about hardship programs that could apply to your situation, though this could wind up hurting your credit score if the card company reports this situation to the credit bureaus. Again, it's best to avoid programs that can hurt your credit score.
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