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By Charles Essmeier
The average American household has nearly $10,000 in credit
card debt, and many people are only able to make the minimum
payment of 2% of the balance. Even 2% is $200, and by paying
the minimum payment, you could be paying on the balance for
decades before you finally pay it off. Since new legislation
will make it more difficult to file for bankruptcy, it may
occur to savvy debtors to try to negotiate a better deal with
their credit card company in order to make it easier to pay off
the balance. Is this possible?
It might be possible, depending on your credit history,
interest rate, and current balance. Your best bet, especially
if you have a history of paying on time, is to simply call your
credit card company and ask if they will lower your interest
rate. They might, especially if you tell them that you got a
better offer from another bank. If you have a history of paying
late, however, they probably will not be willing to lower your
interest rate. That’s unfortunate, since paying late has
probably prompted the credit card company to raise your
interest rate in the first place. Still, it’s worth a phone
call; you may get lucky.
If you’ve been paying your bills on time, asking for a lower
interest rate may be the only option available to you. The
credit card companies aren’t going to be too sympathetic to
your financial woes if they’re receiving payment on time. On
the other hand, if you’re late on your payments, especially if
you’re more than three months behind, you may have some
negotiating leverage. That leverage comes with a few strings
attached, however. You may be able to negotiate a lump-sum
settlement for your outstanding balance, where the credit card
company accepts a portion of your debt and writes off the rest.
They’re often willing to do this instead of turning your debt
over to a collection agency, as it’s cheaper just to settle.
The settlement amount will vary, depending on your interest
rate, your balance and your payment history. This type of
settlement comes with a couple of problems of its own, though.
What if you don’t have the money to settle all at once? If you
can’t pay your bills on time, you probably don’t have the cash
to settle at once. Additionally, the amount of your debt that
gets written off will show up on your credit report as bad
debt, and that will stay there for seven years.
Your credit card company may or may not be willing to work out
a payment plan, but it costs you nothing to ask them, and
negotiating a settlement with them may be cheaper for you than
if you consult with a debt consolidation firm. If your credit
card debt is substantial and you just can’t make the payments,
it’s worth a try.
About the Author: ©Copyright 2005 by Retro Marketing. Charles
Essmeier is the owner of Retro Marketing, a firm devoted to
informational Websites, including http://www.End-Your-Debt.com,
a site devoted to debt consolidation and credit counseling, and
http://www.StructuredSettlementHelp.com, a site devoted to
information regarding structured settlements.
Source: http://www.isnare.com
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