How to Negotiate Credit Card Debt (Yes, It’s Possible)

You could negotiate on your own debt or use a debt settlement company.

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Updated May 31, 2024
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The two primary strategies for negotiating credit card debt are to negotiate on your own or use a third-party debt settlement company.

Either method could save you money, but they each have their pros and cons. It could also make sense to consider an alternative option to get out of debt, such as using one of the best balance transfer credit cards.

Let’s explore how to negotiate credit card debt so you can decide on the best plan of action moving forward.

In this article

Key takeaways

  • Negotiating credit card debt on your own consists of contacting your credit card company and seeing if they’re willing to work out a deal with you. If your debt has already gone to collections, you would 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. Keep in mind that there are risks associated with many debt settlement companies, including high fees and potential scams.
  • Other debt repayment solutions include using balance transfer credit cards, debt consolidation loans, and credit counseling agencies.

Why negotiate credit card debt?

The main reason to negotiate credit card debt is to save money by paying less than what you owe. It can essentially serve as credit card debt forgiveness

For example, if you haven’t missed any payments on your debt and your account is in good standing, you could contact your credit card company to negotiate your debt. They might be willing to help in some way, such as by reducing your interest rate.

If you start missing payments, you might be able to negotiate a debt settlement plan with your credit card company or a debt collection agency.

Keep in mind that you can do any of these negotiations on your own, which would remove the need to use a debt settlement company. Taking this route will also help you avoid debt settlement fees.

Types of credit card debt settlements

Here are a few common types of credit card debt settlement agreements.

Workout agreements

A lender could use a workout agreement to lower your credit card interest rate or reduce your monthly payment amount. They might agree to this type of plan if you’re behind on payments.

Note that this sort of agreement is typically a permanent renegotiation of your credit card agreement. That means you would have to follow the new terms and conditions or suffer certain consequences.

For example, you might end up having to pay a higher interest rate if you fail to make payments according to your new agreement.

When a workout agreement might make sense: If you’re able to keep up with payments because your card issuer lowers the interest rate or reduces your monthly payment amount

Lump-sum settlements

A lump-sum settlement is when a creditor accepts an upfront lump-sum payment rather than the full amount 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.

When a lump-sum settlement might make sense: 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

You often have to claim forgiven debt from certain debt settlements as taxable income on upcoming tax returns. For example, if you owe a lender $10,000 and you pay $6,000 in a lump-sum settlement, you’ve been forgiven $4,000. That $4,000 typically counts as income for tax purposes. There are exceptions, though, so if you’re uncertain, contact a tax professional.

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, such as 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.

When it might make sense: If you’re experiencing an unexpected financial hardship and need some help to make your credit card payments

How to negotiate credit card debt

Follow these simple steps to help negotiate credit card debt.

Decide how much you can pay

The type of debt repayment or settlement plan you might end up with largely depends on how much you can afford to pay and what makes sense for your personal finance goals.

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

If you feel like you could make your minimum payments if they were a bit lower, a workout agreement might make sense to have a lower interest rate or reduced monthly payment.

If you simply want to be rid of your debt as quickly as possible and have enough funds on hand, a lump-sum agreement could make sense.

If you’re struggling to make your payments because you’ve been sick or recently lost your job, consider looking into a hardship agreement or forbearance plan for financial relief.

Contact your credit card issuers

After you’ve assessed your financial situation, it’s time to call all the applicable credit card companies.

It’s important to prepare yourself for these calls with all the information you need, including:

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

You want to be honest and factual when talking to card issuer representatives. You also don’t want to get into any arguments or have any heated discussions.

Offer your terms

You should start by seeing if there are any programs you might qualify for according to the financial situation you’ve explained. For example, you might ask what assistance is available if you can’t make payments.

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

Ask about:

  • Any applicable fees
  • How long the 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 have a specific plan in mind, 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 — don’t agree to anything you don’t completely understand or can’t afford.

Get everything in writing

Don’t rely on everything you hear from a representative over the phone. Get it in writing. That includes having representatives 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.

If you talked to a specific representative, get their name. Try to get their phone number extension and email address, too, if available. 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, that’s evidence in your favor in case you need it.

Consequences of debt settlement

These are some of the possible consequences of a debt settlement.

  • Impact to credit score: A settled account (an account with a debt that was settled for less than the full balance) can show up on your credit report and last for seven years. This can significantly impact your credit score.
  • Paying fees: You might have to pay fees if you use a debt settlement company.
  • Time taken: The debt settlement process could take years to complete.
  • Tax implications: You typically have to pay income tax on different types of forgiven debt.
  • Overall risk: In some cases, debt settlement might leave you worse off than when you began. This is especially true if you’re scammed by a debt settlement company that overpromises what services they can deliver.

Other credit card debt options

These are some alternatives to using a standard debt settlement plan or agreement offered by a creditor.

Balance transfer credit card

The best balance transfer credit cards offer a 0% intro APR for a certain amount of time, usually 12 months or more.

Taking advantage of one of these offers allows you to move high-interest debt to a balance transfer card where you can, hopefully, pay off your debt without having to worry about interest.

Note that balance transfers 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.

Check out the best credit counseling companies.

Debt consolidation loan

A debt consolidation loan could help you organize your debt by putting it all in one place, potentially giving you one monthly payment rather than multiple. It could also help you save money on interest by giving you a lower overall interest rate.

Learn more about the best debt consolidation companies.

Debt settlement company

Debt settlement services and debt relief companies could help you pay less than what you owe by coming to an agreement with your creditors or applicable debt collectors to settle debt.

However, it’s important to thoroughly vet debt settlement companies to make sure they’re legit and so that you’re aware of any fees you might have to pay for settling your debt. Other than paying the cost of using a debt settlement company, you might also have to pay late fees to your creditors if you stop making payments or make late payments.


What percentage will credit card companies settle for?

It’s common for credit card companies to settle for 40% to 50% (or more) of what you owe. For $10,000 of credit card debt, that could mean paying a settlement of $4,000 to $5,000. You might get a better settlement offer through a debt settlement company, but you could also have to deal with high fees.

Is it possible to negotiate a credit card payoff?

It may be possible to negotiate a lump-sum settlement with your credit card company. This typically involves the card issuer closing your account after you pay a large portion of your debt upfront. The settled account would show up on your credit history for seven years and negatively impact your credit score.

Is it a good idea to settle credit card debt?

Settling credit card debt could make sense for your situation if you need help reducing your payment amounts to get out of debt. But be aware that for-profit debt settlement companies could be risky to work with because of high fees and a negative impact to your credit score.

What is the difference between a settlement and bankruptcy?

Bankruptcies are handled by courts, while debt settlements don’t have to be. Both processes remain on your credit report for at least seven years and will negatively impact your credit score. There’s a chance that a bankruptcy could forgive all your applicable debt, while a debt settlement typically reduces the amount of debt you owe.

Bottom line

If you have mounting credit card debt and aren’t sure where to turn for help to pay it off, consider credit card debt negotiation. You can start the process by contacting your credit card company or an applicable debt collection agency, or you can use a debt settlement company.

We recommend starting by trying to negotiate your credit card debt yourself. You have nothing to lose by seeing what options are available, even though it could be uncomfortable to negotiate your own debt.

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

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  • No upfront fees1
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Author Details

Ben Walker, CEPF, CFEI®

Ben Walker, CEPF, CFEI®, is credit cards specialist. For over a decade, he's leveraged credit card points and miles to travel the world. His expertise extends to other areas of personal finance — including loans, insurance, investing, and real estate — and you can find his insights on The Washington Post,, Yahoo! Finance, and Fox Business.