How to negotiate directly with your credit card company

If your credit card bills are coming in fast and furious, and you’re having a hard time keeping up, you’re probably hoping for some relief. And in some cases, you might be able to get it by negotiating directly with your credit card company.

Many credit card issuers offer hardship plans or will allow you to settle your debt for less than what you owe. It isn’t necessarily easy, but it might be just what you need to get caught up on your debt.

Related article: What are credit card hardship programs and how do I know if I’m eligible?

Dealing with your credit card company: timing is everything

Before you pick up the phone to call your creditors, take stock of all your credit card debt. Write down how much you owe, to whom, and the interest rates on each account. 

Also find out when you last made a payment on the account or accounts. In order for your credit card company to negotiate with you, you’ll probably need to have missed at least one payment. If you want to settle your debt, which means paying it off for less than you owe, then you’ll probably have to be several months behind.

“Timing is everything when it comes to negotiating with your credit card company,” says Charles Phelan, founder of debt management company ZipDebt. “Most creditors won’t offer you any relief when the account is in good standing.”

Which doesn’t mean you should purposely miss payments to strike a deal, Phelan says.

What’s the plan?

To figure out what kind of help to ask a credit card company for, you have to know your financial situation. If your interest rate or minimum payments were reduced on a card or two, even temporarily, would that be enough to fend off missed payments? Are you worried about being sued for a debt and hoping to settle it before that happens? 

Make a budget and figure out realistically how much you can afford to pay toward your debt each month. If you want to settle your debt, come up with an amount you’d like to settle the debt for. Once you have a good idea of your financial situation and what you can afford to pay, you can consider some of the available options for negotiating with your creditors. 

Related article: How to negotiate credit card debt settlement by yourself

Hardship plan  — Many credit card companies offer hardship plans, which can reduce your monthly payments or how much you owe through lower interest rates, lower minimum payments, or waived fees and penalties. The plans can be temporary or long-term. Be prepared that your creditor might lower your credit line or freeze your account. And with a longer repayment plan, they will likely close the account altogether.

Forbearance — With forbearance, your credit card company agrees to lower or eliminate your interest rate or even halt your payments completely — temporarily, of course. A forbearance is usually for cases where you expect your financial situation to rebound soon. Unlike some of the other options, none of your debt will be forgiven. 

Debt settlement — This isn’t the easiest process and it will hurt your credit score, but it could be an alternative to bankruptcy in some cases. Debt settlement involves negotiating with your creditors to pay off your debt for an amount less than what you owe. That might come in the form of a lump sum settlement or payments spread out over time. In general, a reasonable expectation is settling your debt for 50% or less of what you owe if your account is five or more months late, says Michael Bovee, a debt relief expert with more than 20 years experience and the co-founder of Resolve. 

If your account hasn’t been charged off yet — that’s typically the point when it’s 180 days past-due and your creditors write it off as a loss — legally you can only settle your debt in three payments or less, Bovee says. After your debt has been charged off, he says, you may be able to negotiate a longer repayment period with your creditor, or a debt collector.

Related article: What does it mean to have my unpaid debt charged off?

Call your creditors

Once you have an idea of the kind of help you need, call your credit card company. Ask to talk to someone in the collections and recovery department. You need to work with someone who has the authority to make major changes to your account. 

Explain your situation and don’t be afraid to tell them about factors that led to you falling behind on your payments or struggling — a job loss, an illness, an unexpected expense. If you reach an agreement, make sure you have it in writing before you make any payments.

Most credit card issuers are banks. And each one has its own policies and programs when it comes to dealing with debt. The majority of them, however, don’t sell their debts to outside debt buyers, Bovee says. They retain ownership of the debt even if they use third-party debt collectors to collect the debt.

“That’s mostly a good thing for consumers,” Bovee says. “Debt buyers tend to be more litigious.”

Negotiating with major credit card companies will be fairly similar, Bovee says. The five largest credit card companies are AmericanExpress, Chase, Citi, Bank of America and Capital One. 

When it comes to debt settlement, some companies are a little more flexible than others. Bank of America and Chase, for example, tend to be the best to work with, Bovee says, often agreeing to settle for about 5% to 10% less than the other companies. Citi, on the other hand, will probably want a larger settlement than some of the other companies, he adds.

Discover and AmericanExpress tend to be fairly litigious, Bovee says, so it’s something to consider if you’re deciding which bills to pay off or settle first.

“You need to figure out who you owe, how much money you have, and start knocking out as much debt as you can,” Bovee says.