{"id":13608,"date":"2024-12-03T17:36:22","date_gmt":"2024-12-03T23:36:22","guid":{"rendered":"https:\/\/www.lexingtonlaw.com\/blog\/?p=13608"},"modified":"2025-06-03T16:43:15","modified_gmt":"2025-06-03T22:43:15","slug":"negotiate-credit-card-debt","status":"publish","type":"post","link":"https:\/\/www.lexingtonlaw.com\/blog\/credit-cards\/negotiate-credit-card-debt.html","title":{"rendered":"How to negotiate credit card debt"},"content":{"rendered":"\n
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The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. <\/em>See Lexington Law\u2019s editorial disclosure for more information.<\/em><\/a><\/p>\n\n\n\n

You can negotiate your credit card debt by confirming what you owe and then contacting your credit card company. They may allow you to use one of the three debt settlement options to help you manage your debt or settle it for a lesser amount.<\/p>\n\n\n\n

Credit card debt is a growing concern for Americans. A report from the New York Federal Reserve<\/a> shows that national credit card debt reached $1.13 trillion at the end of 2023. The average American has about $6,501 in personal credit card debt<\/a>, a balance most people can\u2019t easily pay off in full.\u00a0<\/p>\n\n\n\n

Having credit card debt is stressful and can harm your credit health, making it difficult to reach your financial goals, like buying a house or new car. However, it\u2019s also negotiable, and you may be able to settle your debt for a more manageable amount. Let\u2019s explore how to negotiate credit card debt, what settlement options exist and how settling your debt can impact your financial situation. <\/p>\n\n\n\n

How to negotiate credit card debt yourself<\/h2>\n\n\n\n

When negotiating your credit card debt, you\u2019re asking the creditor to take a lesser amount than the total you owe. It\u2019s helpful to keep this in mind as you go through this do-it-yourself<\/a> method to improve your chances of the creditor agreeing to the settlement.<\/p>\n\n\n\n

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  1. Find out how much you owe: <\/strong>One of the best things you can do is fully prepare before calling the credit card company. That starts with knowing how much you owe. This will also ensure there are no errors<\/a> on your credit card statements for late or missed payments.<\/li>\n\n\n\n
  2. Learn why credit card companies settle debt: <\/strong>Understanding why credit card companies settle credit card debts will help with your negotiations. Sometimes, they\u2019ll negotiate if you\u2019re going through financial hardships, or they simply feel that receiving some payment is better than none.<\/li>\n\n\n\n
  3. Decide which type of debt settlement is best for you: <\/strong>There are three primary types of settlement agreements and knowing which one is best for you will help you as you enter the negotiation process.<\/li>\n\n\n\n
  4. Contact the credit card company: <\/strong>Once the research is complete, you should call your credit card company to negotiate the debt. You can send a letter, but making the phone call is a bit more personal and may help you settle your debt.<\/li>\n\n\n\n
  5. Agree to terms that fit your needs: <\/strong>This is a negotiation, so you should only agree to the terms if they suit your needs.<\/li>\n\n\n\n
  6. Take detailed notes: <\/strong>Whenever you talk to a credit card company, especially when you\u2019re settling a debt, it\u2019s beneficial to take notes just in case you need to follow up. Note the date and time you called, who you spoke with and the details of the agreement.<\/li>\n\n\n\n
  7. Send a pay for delete letter if needed: <\/strong>If you\u2019d like to get a negative item like a late or missed payment removed from your credit report, send a pay for delete letter<\/a> to discuss the possibility of the negative item being removed in exchange for payment.<\/li>\n\n\n\n
  8. Get documentation for the agreement: <\/strong>After you reach an agreement, ask for the agreement in writing. You can request that the credit card company send you something in the mail or via email.<\/li>\n<\/ol>\n\n\n\n
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    Why you should negotiate credit card debt<\/h2>\n\n\n\n

    Negotiating credit card debt can result in settling for a lower amount than what you owe. This can save you money while helping you alleviate debt. Not every credit card company will agree to negotiate, but yours may be willing to if you\u2019ve been a loyal customer until this recent hardship. <\/p>\n\n\n\n

    When struggling financially, people commonly let their credit card payments slide. Credit card debt works differently from other types of debt, such as mortgage or auto loans. If you don\u2019t pay a loan, you risk losing your car or house. However, credit card debt is unsecured and doesn\u2019t carry the same consequences. <\/p>\n\n\n\n

    This doesn\u2019t mean not paying credit card debt is harmless. Failing to make payments can damage your credit or cause your account to default. Once an account becomes delinquent for too long, credit card companies try selling it to a collection agency for a lower amount. Most companies figure getting some money is better than none, but they may be willing to negotiate the debt with you if they\u2019ll receive a higher amount than they would by selling it.<\/p>\n\n\n\n

    Why credit card companies negotiate debt<\/h2>\n\n\n\n

    The primary reason credit card companies are willing to negotiate credit card debt is because it\u2019s better to receive payment than to not receive it. Once an account becomes delinquent for too long, credit card companies see it as a loss and sell the debt to an outside collection agency for a lower amount. By negotiating with you, the debt holder, they may receive more than they would by selling the debt to a collection agency.<\/p>\n\n\n\n

    This doesn\u2019t mean that you should purposely fall behind on your credit card bills, though. Missed and late payments can result in derogatory marks<\/a>, harming your credit.<\/p>\n\n\n\n

    The credit card companies may also be willing to negotiate your debt if you\u2019re a loyal customer. If you have a good history with the credit card company but have fallen on hard times, the company may settle your debt to maintain the relationship.<\/p>\n\n\n\n

    How do credit card debt settlements work?<\/h2>\n\n\n\n

    Credit card debt settlements refer to changes in your account terms or repayment amount. There are three primary types of settlements that credit card companies may agree to: hardship agreements, workout agreements and lump-sum agreements. <\/p>\n\n\n\n

    3 types of credit card debt settlement<\/h2>\n\n\n\n

    Credit card companies most frequently use three primary types of credit card debt settlement. Understanding each one can help you prepare before you call to negotiate.<\/p>\n\n\n\n

    Hardship agreement<\/h3>\n\n\n\n

    Also referred to as a forbearance program, a hardship agreement provides temporary relief to borrowers experiencing financial hardship from job loss, medical issues or other unforeseen circumstances. Your card issuer may suspend late fees, lower your interest rate or temporarily reduce your monthly payment. <\/p>\n\n\n\n

    However, you\u2019ll still owe your total outstanding balance. Additionally, your card issuer may report negative information, like missed payments, to credit bureaus<\/a> during the forbearance period, depending on the bank\u2019s policies. <\/p>\n\n\n\n

    Workout agreement<\/h3>\n\n\n\n

    With a workout agreement, your card issuer can reduce or temporarily waive your interest rate. The bank may also agree to other solutions, including waiving past late fees or reducing your monthly payment. However, it may close your account as part of the agreement, which can hurt your credit score. <\/p>\n\n\n\n

    Closing the account decreases your available credit limit, which can negatively affect  your credit utilization ratio. This factor accounts for 30 percent of your overall FICO\u00ae score<\/a>. <\/p>\n\n\n\n

    Lump sum agreement<\/h3>\n\n\n\n

    A lump-sum agreement allows you to pay your outstanding balance in full at a lower amount. For example, if you owe $5,000 in credit card debt, you can ask to settle the debt that day for a lesser amount of $4,000 or $3,000, potentially saving thousands. <\/p>\n\n\n\n

    After making an offer, your card issuer may suggest a counteroffer. Negotiate until you settle on a number that works for both parties, and ask for a written agreement. <\/p>\n\n\n\n

    4 alternatives to credit card debt settlement<\/h2>\n\n\n\n

    Negotiating credit card debt can have numerous benefits, including paying less than what you owe, paying off your debt faster and receiving lower payments or interest rates. However, it can also have some drawbacks. For example, settling your debt can hurt your credit or require you to pay taxes on the amount you saved.<\/p>\n\n\n\n

    The IRS counts<\/a> settlement savings of $600 or more as income. If this happens, you\u2019ll receive a 1099-C Cancellation of Debt form from your creditor. To avoid this risk, consider alternative methods of managing your debt, including:<\/p>\n\n\n\n

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    1. Balance transfer cards: <\/strong>Balance transfer cards<\/a> allow you to move balances from multiple credit card accounts to one. This can help simplify your debt payments, and sometimes, you can get a much better interest rate.<\/li>\n\n\n\n
    2. Debt consolidation loans: <\/strong>Much like a balance transfer card, a debt consolidation loan allows you to get a loan to pay off your credit card debts. After that, you have one loan to pay back rather than paying multiple credit card payments.<\/li>\n\n\n\n
    3. Find additional sources of income: <\/strong>For some, the best option is to find additional sources of income through selling old items they no longer need or working extra hours at their current job to pay down their debt.<\/li>\n\n\n\n
    4. Borrow from friends or family: <\/strong>If possible, borrowing from a friend or family member to pay off your debt may be the ideal solution because they often won\u2019t charge you interest, unlike a credit card company. However, if you choose this option, expectations are set for all parties involved so you can preserve the relationship.<\/li>\n<\/ol>\n\n\n\n
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      What to do if you need help negotiating your credit card debt<\/h2>\n\n\n\n

      Many people choose to negotiate credit card debt on their own, but some seek professional help if the process seems too overwhelming. There are two main types of companies to consider:<\/p>\n\n\n\n