How to Negotiate Credit Card Debt: A Practical Guide

Credit card companies often have more room to help than people expect, but nothing is guaranteed. This guide walks through your options from the mildest to the most serious, with sample wording you can adapt. The examples use US rules. Laws and programs differ in other countries.

Before you call

• Have your balance, APR, minimum payment and account number in front of you.
• Decide what you can realistically afford each month.
• Be calm and polite. The person on the phone usually cannot be pressured, but they can help.
• Write down the date, the representative's name and any reference number.
• Ask for any agreement in writing before you rely on it.

Ask for a lower interest rate

This is the easiest request to make, especially if you have paid on time. A lower rate means more of each payment reduces your balance. You could say:

"I have been a customer for several years and I am working to pay down my balance faster. My current APR is 24%. Is it possible to lower it?"

If the answer is no, you can ask:

"Is there another team or a supervisor who can review this? Are there any promotional rates I qualify for?"

They may still say no. If so, thank them and try again in a few months. Use our credit card payoff calculator to see how much a lower rate would save before you call.

Ask about hardship programs

If you lost income or had a medical or family emergency, ask whether the issuer has a hardship program. These can include a temporary lower rate, reduced payments or waived fees for a set period. You could say:

"I am having trouble making my payments because of a recent job loss. Do you offer a hardship program, and what are the terms?"

Ask how the program affects your account. The card may be frozen or closed, and it may be reported differently to the credit bureaus. Get the terms in writing.

Consider nonprofit credit counseling

A nonprofit credit counseling agency can review your budget and debts, often at low or no cost for the first session. It may offer a debt management plan. In a plan, the agency asks your creditors for lower rates, and you make one monthly payment to the agency, which pays your creditors. Plans commonly last several years.

Expect a small monthly fee, and ask about all fees up front. Cards in the plan are usually closed. Be wary of any company that promises guaranteed results or asks for large fees before doing any work.

Negotiating a settlement

A settlement is an agreement where the creditor accepts less than the full balance as payment in full. Creditors usually only consider this when the account is already seriously behind, and it comes with real costs:

• Credit score: the account is typically reported as settled for less than the full amount, late payments are recorded, and negative marks can stay on your report for up to seven years.
• Taxes: in the US, forgiven debt of $600 or more may be reported to the IRS, and canceled debt can count as taxable income unless an exception such as insolvency applies. Ask a tax professional.
• Collections and lawsuits: while you are not paying, fees and interest keep adding up, and the creditor may pass the account to collections or sue.
• Settlement companies: for-profit companies often charge fees and tell you to stop paying your creditors first. Think carefully before using one.

If you decide to try, you could say:

"I can pay $2,000 as a lump sum if you will accept it as full settlement of this account. Please confirm the offer in writing before I send any payment, and tell me how it will be reported to the credit bureaus."

What not to do

• Do not ignore calls and letters. Silence usually makes things worse.
• Do not pay anything until the agreement is in writing. A verbal promise may not hold.
• Do not give anyone access to your bank account or pay large upfront fees to someone promising to erase your debt.
• Do not take on a new high-interest loan to fix the old one.
• Do not stop paying without understanding the consequences.

Build a plan around the result

Whatever your creditor agrees to, you still need a plan to finish the job. Enter your new balance, rate and payment into the Debt Free Calc calculator to see your debt-free date. For more ways to speed up your payoff, read our guide to paying off credit cards fast.

This article is general information, not financial advice.