Can You Negotiate Credit Card Debt? Yes, Here’s How

Credit card debt can be a scary thing. Cards carry interest rates in the teens, even the twenties. Rates are so high that it can feel like you might never dig yourself out. But if you’ve got a substantial balance you’re having trouble paying down, know there are options for lessening the burden.

There are two primary strategies for negotiating credit card debt: Do it yourself or use a third-party debt settlement company.

Either method could possibly save you money, but I’d recommend not even considering using a debt settlement company — I’ll get into why more below.

If you don’t feel comfortable negotiating directly with your credit card issuer, though, you could also consider an alternative option for getting out of debt, such as using a balance transfer credit card with a 0% intro APR offer.

Key takeaways

• Negotiating credit card debt on your own involves contacting your credit card company and seeing if it’s willing to work out a deal with you. If your debt has already gone to collections, you likely need to contact the debt collection agency rather than the card issuer.
• If you don’t feel confident negotiating credit card debt yourself, you could hire a debt settlement company. But know there are significant risks associated with many debt settlement companies, including high fees, potential scams, and low success rates.
• Other debt repayment solutions include using balance transfer credit cards, debt consolidation loans, and credit counseling agencies.

Why and when to negotiate credit card debt

The main reason to negotiate credit card debt is to save money by paying less than you owe. It’s often the closest you can get to credit card debt forgiveness.

When a credit card holder is having trouble paying off a balance — whether they’re only making minimum required payments or have begun missing payments — the issuer has an incentive to continue getting some money out of the cardholder rather than facing a potential default and getting no money out of them.

That means the deck isn’t entirely stacked in the issuer’s favor, and you might have a little more leverage than you think. If nothing else, it doesn’t hurt to try negotiating, whether directly with the credit card issuer or with the help of a debt settlement company.

Types of credit card debt settlements

There are a few common outcomes when negotiating with credit card issuers over unpaid debts.

Workout agreements

If you make the case to your issuer that you would be in a better position to pay off your debt if the terms of your agreement were a little more forgiving, the issuer could use what’s called a workout agreement to lower your credit card interest rate or reduce your monthly payment.

I’ll note that there tends to be some give and take to this sort of agreement. The issuer may lower your borrowing limit or instate other new terms and conditions. These changes are typically permanent, but if you know you’ll be able to keep up with payments with a lower interest rate or reduced monthly payment amount, this could be a workable solution.

Lump-sum settlements

A lump-sum settlement is when a creditor accepts an upfront lump-sum payment that’s less than the full amount you owe to cover your debt. Your credit card company will then typically close your account and report the settlement to the major credit bureaus.

Be aware that settled accounts stay on your credit report for seven years, negatively impacting your credit score during that time.

I can see a lump-sum settlement being a sensible solution if you have enough money on hand to make a large upfront payment and want to get rid of your debt as quickly as possible, regardless of the potential credit score impact

Hardship agreements

A hardship agreement, hardship program, or forbearance plan is when a lender agrees to offer a reprieve due to an unexpected financial setback, like an illness, injury, or job loss. The financial relief could come in the form of a lower interest rate, reduced minimum monthly payment, and/or fee waiver.

It’s important to initiate a hardship plan before you get to the point where you’re missing payments. As I mentioned, you’re almost always going to be better off negotiating with your credit card issuer if your account is in good standing and you’re still making payments.

Before you pursue a hardship agreement, make sure you have documentation demonstrating the nature of your circumstances handy — think medical bills, pay stubs, etc.

While hardship agreements don’t often impact your credit score, issuers may indicate that they’ve made accommodations when reporting to credit bureaus, which can affect your creditworthiness.

How to negotiate credit card debt settlement yourself

I suggested that working through a third-party debt settlement company is technically an option if you want to find ways to mitigate your debt burden. I also mentioned that doing so isn’t typically the best idea for a number of reasons.

To illustrate, consider that these companies have such a shady reputation that the United States Government Accountability Office dedicated resources to investigating their practices, finding that some engage in “fraudulent, deceptive, and abusive practices.” Most of the companies reviewed collect fees from customers upfront, before settling debts.

Scour the internet, and you’ll find plenty of stories that point to debt settlement companies being a waste of time and money, if not downright predatory. For that reason, it’s almost always the better call to approach negotiation on your own — with plenty of preparation, of course.

Step 1: Decide how much you can pay and which approach to take

The type of debt repayment or settlement plan you might end up with largely depends on how much you can afford to pay.

To figure out how much you can pay, review all the credit card debt you owe. You can quickly calculate this by checking your online accounts or using a budgeting app that keeps track of all your finances.

Review your checking and savings balances and necessary monthly expenses (mortgage, rent, utilities, etc.) to determine how much you have available to pay down your debts.

• A workout agreement might make sense if: You do the math and find that you could more easily make your minimum payments if they were a bit lower.
• A lump-sum agreement could make sense if: You find that you’ve got enough liquid cash on hand and can stomach any potential hits to your credit score.
• A hardship agreement or forbearance plan for financial relief could make sense if: You’re struggling to make your payments and don’t have a lot of flexibility because you’ve been sick or recently lost your job.

Step 2: Contact your credit card issuers

After assessing your financial situation and deciding which direction to take, it’s time to call all the applicable credit card companies.

You’ll want to come prepared with all the information you need to make your case, including:

• Details about your financial situation, such as the difficulty you’re having making payments and why you’re experiencing these difficulties
• Documentation of any hardships you’re experiencing
• Questions about the type of agreement or help you might be looking for

Step 3: Offer your terms

Start by seeing if the issuer offers any programs you might qualify for according to the financial situation you’ve explained.

If there are plans available, learn about their terms and conditions.

Ask about:

• Any applicable fees
• How long terms last
• Whether the terms can change
• What information is reported to credit bureaus
• Anything else pertinent to the situation

Depending on how long you’ve been with a credit card issuer, you might ask about reduced interest rates or monthly payments because of your loyalty. If you’ve generally kept accounts in good standing, they may be inclined to cut you some slack.

If you have a specific plan in mind that you know would work for you, such as a lump-sum settlement, ask if that’s an option.

If you’re talking with a representative who doesn’t seem to know what you’re talking about or what options are available, ask to have the request escalated or transferred to someone else.

Remember — stay centered and measured. Managing debt can be an emotional experience, don’t jump the gun on a plan before you have a full picture of its implications, and don’t agree to anything you don’t completely understand or can’t afford.

Step 4: Get everything in writing

Any lawyer worth their salt will tell you: The written word is everything. Don’t solely rely on what the representative tells over the phone. Get it in writing. Insist that the issuer send you emails with a clear set of terms and conditions to go along with any payment plan or agreement that may have been offered before agreeing.

Get the reps name. Try to get their direct extension and email address, too, if possible. Ask about a case or agreement number and have that written down in case you need to call back.

At the end of the day, you want everything in writing so you have a clear paper trail in case there are any disputes or discrepancies down the road. For example, if you have an emailed agreement stating that your interest rate is supposed to be lowered by a certain amount and when your next billing cycle closes you find that it’s not, you’ve got evidence that could remedy the situation.

Other ways to manage credit card debt

If negotiating with your issuer doesn’t sound like the right choice for you, these are some alternatives to seeking an agreement with your creditor.

Open a balance transfer credit card

Balance transfer cards allow you to transfer your balance from another issuer onto a card that often has lower interest rates or a 0% intro APR period. The best balance transfer credit cards offer a 0% intro APR for at least 12 months. Some offer intro periods as long as 21 months.

Taking advantage of one of these offers allows you to move high-interest debt to a card that gives you some buffer time to work on paying down your balance without accruing interest.

Note that balance transfers often come with balance transfer fees, so you have to calculate whether you would save enough money on interest to warrant paying the transfer fee.

Credit counseling agency

Many nonprofit organizations offer credit counseling services, such as debt consolidation and financial education. These types of organizations can assign credit counselors to help you create a debt management plan to get out of debt.

You can find a list of federally approved credit counseling agencies on the U.S. Department of Justice website or check out our list of the best credit counseling companies.

Debt consolidation loan

Many financial institutions offer debt consolidation loans that could help you organize your debt by putting it all in one place, potentially giving you one monthly payment rather than multiple. This type of loan could also help you save money on interest by giving you a lower overall interest rate.

Learn more about the best debt consolidation companies.

Bottom line

If you have mounting credit card debt and aren’t sure where to turn for help to pay it off, consider negotiating with your issuer. We recommend starting by trying to negotiate your credit card debt yourself. Third-party debt settlement companies are too notoriously expensive, ineffective, and, at times, deceptive to recommend, though they are an option.

For more resources, check out the Consumer Financial Protection Bureau’s guide to negotiating your debt and review our guide on how to pay off debt.

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