If you want to use your credit card to your advantage and avoid being burdened with debt, understanding how you may be able to negotiate with creditors can help. You have every option to air out grievances or make requests to your credit card issuer if you believe that negotiating may be able to put you in a better financial situation.
Issuers value you as a client and want you to keep you all to themselves and away from the competition. As a result, they may be more likely to agree to better terms to maximize your benefits. You may be surprised at how cooperative your creditors can be since their aim is to strengthen your relationship and loyalty with them.
4 issues you can discuss with creditors
Of course, you can’t negotiate everything with creditors. But there are a few issues that are worth looking into. Here are four main reasons you may want to discuss your account with your credit card issuer.
Changing your payment date
One of the things you can negotiate is your due date. You might be able to afford it but where the date falls can impact when you will have the money available. For instance, it helps to have the monthly payment date(s) right after you receive your paycheck. This helps ensure you have the funds in hand when the bill is due.
Lowering your interest rate
Credit cards are notorious for their high interest rates. In fact, this is one of the most common reasons people negotiate with their creditors. Although issuers can usually raise their rates without reason, you also have the ability to request a lower one.
Consider calling and comparing their rates with another credit card issuer. The best time to bring this up is when you have just received a tempting, low-interest-rate credit card offer from another company.
Requesting a debt reduction
You also have the option to request a debt reduction. This is most beneficial when you are struggling to keep up with your payments due to a recent hardship. A late payment often comes with consequences since you will be charged additional interest if you are unable to pay the total monthly amount due.
The idea is to only pay part of what you owe and convince the creditor to forgive the rest. You might want to read about the pros and cons of debt reduction before you consider negotiating.
Suspending payments for a certain period
The last type of negotiable issue is known as a forbearance agreement. This happens when you request permission to stop making payments while you get your finances in order.
Some creditors may agree to it. However, most of them likely won’t agree to cancel the interest. Therefore, the balance will continue accruing even while your monthly dues are on hold.
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Tips when negotiating with credit card issuers
Before you call your credit card issuer, there are a few things you should know:
Know when to negotiate
Perfect timing can help you obtain the agreement you are aiming for. If you have been making payments on time for the past couple of months, you have good leverage to discuss high interest rates with creditors. Dealing with a financial hardship such as a job loss or medical emergency should also prompt you to hammer out a deal.
Know who to talk to
It is also important that you speak to the right person within the credit card company. You may get faster results if you negotiate with someone who has the authorization to grant approval. For instance, a change in your due date can be discussed with anyone from customer support while a lower interest rate or debt reduction requires managerial approval.
Know your options
It’s important that you know what options are available to you as a consumer before you decide to negotiate with creditors. This is especially true if you are requesting a debt reduction. Also, make sure that you put everything in writing in case proof is needed down the road.
Know where to find help
There are negotiations that work out better when you leave it to a professional. For instance, you could have better luck if your debt reduction is negotiated by a debt settlement company or a lawyer. They know the right questions to ask and can usually get a better settlement than if you tried doing it on your own.
You should be careful when seeking professional help. Keep in mind that any companies you consider should be members of reputable organizations like the National Foundation for Credit Counseling (NFCC) or the American Association for Debt Resolution (AADR).
In addition, they should never charge upfront fees- it is illegal and unethical. And look for common negative themes in a company’s reviews, which is an effective way to uncover any red flags.