Can You Make A Settlement With A Credit Card Company?

If you're struggling to make ends meet, you may be looking for ways to reduce your expenses. You may be thinking about credit card settlement options and how to ask a credit card company for a settlement. While it's not easy to do, it is possible to reach an agreement that will lower your monthly payments and help you get back on track.

Settling With A Credit Card Company

Indeed, getting credit card loans wiped out is not possible. Credit card companies expect you to pay every penny you borrow. However, it’s possible to have some of these amounts forgiven, so you end up paying less than what you owe.

Here’s how to ask a credit card company for a settlement: 

1. Call your credit card company and explain your financial situation. Be honest and upfront about why you're struggling to make payments. Once you've explained your situation, ask if the company is willing to negotiate a settlement. 

2. If they are, be prepared to offer a lump sum payment that is less than the total amount you owe. You may also need to agree to a lower interest rate or an extended repayment period. Typically, you would want to ask for 40-50% of the amount owed. Most companies expect this and will negotiate for a higher amount, and asking for a lower amount allows you to have room for negotiations. If you’re dealing with a credit card company, expect to pay as much as 70-80% of the original amount.

3. If you can reach an agreement, get the terms in writing before making any payments. This will protect you if the credit card company changes the terms of the agreement later on. 

4. Keep up with your payments, even after settling. Missing even one payment can put you back at square one and damage your credit score.

When To Ask For A Credit Card Settlement?

Credit card settlements, or credit card debt forgiveness, are not as generous as they seem. While they may seem to offer you financial relief, they will negatively impact your credit score and prevent you from accessing other loan types, like mortgage loans or business loans, in the future. The negative mark also stays on your credit rating for seven years, which means lenders will view you as a high-risk borrower for a long time. 

Therefore, financial advisors don’t recommend debt settlement as the best way to get out of debt. Paying what you owe in full may be challenging, but it will benefit you in the long run. Other methods, like debt snowball and debt avalanche, can help you pay the debt in full while maintaining a good credit score or rebuilding a damaged one.

However, if a card settlement is the only available option, you can consider the following credit card settlement advice:

  • Be persistent but not aggressive. While negotiations can take a while and become frustrating, credit card companies will not respond to aggression. Make follow-ups but never become an angry customer. Remember who is close to defaulting on their payments.
  • Be patient with the entire process. Settlements can take time and a lot of back and forth. Be patient with the whole process and the employees handling your concerns. 
  • Be truthful with your reasons, but don’t be overly dramatic. Credit card companies will most likely grant requests that are not full of embellishments and outrageous claims. 
  • If you want to pay the least amount, you can wait for your account to be handed off to a third-party collector. When a debt has been in a collection for a long time, credit card companies will sell it for pennies to a third-party collector who will attempt to collect the debt in full. Since they bought the debt for a low price, you can negotiate a lower amount with them. 
  • Start saving cash for the settlement amount. Even if the process takes a while, continue saving money so that when the negotiation is finalized, you have a lump sum of cash ready. 
  • Be wary of accepting help from debt settlement companies that promise to help you settle your debt and encourage you to stop making any payments to the creditor. While there are reputable debt settlement companies, there are a lot of rogue ones who’ll take your money. Be careful and research any company you’d transact with. 

Can You Get A Settlement Figure On A Credit Card?

While difficult, getting a settlement figure on a credit card debt is possible. You must be truthful with your financial predicament and patient during the negotiation process. 

If you have a brick-and-mortar store, learn how to accept credit card payments by reading this other blog by Processing Card. 

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