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Debt Consolidation – Can You Negotiate with Your Credit Card Company?
By Charles
Essmeier
The average American household has nearly $10,000 in credit card debt,
and many people are only able to make the minimum payment of 2% of the
balance. Even 2% is $200, and by paying the minimum payment, you could be
paying on the balance for decades before you finally pay it off. Since new
legislation will make it more difficult to file for bankruptcy, it may occur
to savvy debtors to try to negotiate a better deal with their credit card
company in order to make it easier to pay off the balance. Is this possible?
It might be possible, depending on your credit history, interest rate, and
current balance. Your best bet, especially if you have a history of paying
on time, is to simply call your credit card company and ask if they will
lower your interest rate. They might, especially if you tell them that you
got a better offer from another bank. If you have a history of paying late,
however, they probably will not be willing to lower your interest rate.
That’s unfortunate, since paying late has probably prompted the credit card
company to raise your interest rate in the first place. Still, it’s worth a
phone call; you may get lucky.
If you’ve been paying your bills on time, asking for a lower interest rate
may be the only option available to you. The credit card companies aren’t
going to be too sympathetic to your financial woes if they’re receiving
payment on time. On the other hand, if you’re late on your payments,
especially if you’re more than three months behind, you may have some
negotiating leverage. That leverage comes with a few strings attached,
however. You may be able to negotiate a lump-sum settlement for your
outstanding balance, where the credit card company accepts a portion of your
debt and writes off the rest. They’re often willing to do this instead of
turning your debt over to a collection agency, as it’s cheaper just to
settle. The settlement amount will vary, depending on your interest rate,
your balance and your payment history. This type of settlement comes with a
couple of problems of its own, though. What if you don’t have the money to
settle all at once? If you can’t pay your bills on time, you probably don’t
have the cash to settle at once. Additionally, the amount of your debt that
gets written off will show up on your credit report as bad debt, and that
will stay there for seven years.
Your credit card company may or may not be willing to work out a payment
plan, but it costs you nothing to ask them, and negotiating a settlement
with them may be cheaper for you than if you consult with a debt
consolidation firm. If your credit card debt is substantial and you just
can’t make the payments, it’s worth a try.
©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of
Retro Marketing, a firm devoted to informational Websites, including
End-Your-Debt.com, a site devoted to
debt consolidation
and credit counseling, and StructuredSettlementHelp.com, a site devoted to
information regarding
structured
settlements.
Article Source:
http://EzineArticles.com/
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