How To Negotiate Down Credit Card Debt

“When dealing with people, remember you are not dealing with creatures of logic, but with creatures bristling with prejudice and motivated by pride and vanity.” – Dale Carnegie

Ah, the aftermath of the holidays, nothing like starting out a New Year with a crap ton of credit card debt from holiday shopping and any other expenses! That’s how I started out this year, a cool 2k in the hole. Now a little background about me, I NEVER put more on a credit card than I can pay off at one time. In fact, for the past ten years I’ve paid all my balances off in full essentially using my credit card as a “charge card”. Why? Because I hate having to pay interest. So as I was bumming around this morning, I thought I’d give my credit card company a call. Today’s blog is about some useful insight I picked up from that phone call,and some negotiation tactics I used to get what I wanted :

 

Know What You Want – Before going into any negotiation you want to do your homework and identify what you want. In my case I had two options in mind, either get a reduced rate to pay my balance back, or get the balance reduced. Additionally study up on the terms of your credit card. In my case my APR was 18.15% so I knew if I was going to negotiate an interest rate I wanted something closer to 10%. If I was able to reduce my balance I knew I would be comfortable reducing my balance of $2000, by $600 to about $1400.00 total. Notice how my goals were practical. Trying to negotiate down your entire balance probably won’t work, but try reducing it a comfortable amount for both you and the credit card company.

 

Have The Leverage – During the entire conversation I had the leverage. How did I know? Because I’ve been with the same credit card company for 10 years, have never called them to reduce a rate or balance, and I pay in full every month; this was my leverage for the conversation. After speaking with the first representative I explained my situation truthfully saying I had some expenses that I didn’t anticipate and would like to negotiate my terms. I would always lead the conversation back to how I’m a loyal customer, have never called them to do this before, etc… The representative said he was able to offer me 14% for 7 months. This was a really good sign, because it showed me they were able to budge. I still wanted more though, so I came back with saying, how about 10% and reducing the balance to $1400.00 he then said he had to check with is supervisor.

 

Holding Music…

 

After a 10 minute hold the Representative came back to me saying that the 14% rate for 7 months was the best he could do. Now, here’s a really important tip: Never yell your head off at a Representative! Keep calm, collected, and dig dangerously into your empathy instead. I replied “Raj, you have been so helpful! Thank you so much for your help and time I really appreciate you taking the time to take care of me. This obviously isn’t the resolution I was hoping for. Would I be able to speak with your supervisor? Just so I can understand their perspective.” Without any issues I was transferred to a supervisor.

 

More Holding Music….

 

After speaking with the supervisor and explaining what I wanted (either a further reduced interest rate or a reduction in principal) the supervisor mentioned she might be able to do something for me. She then offered me 0% interest for 2 months. This sounded like a good deal to me because I knew I could pay off the balance technically now if I needed to; but 2 months interest free would buy me time with paying down the balance while not having to take everything out of my savings account all at once. This solution met my need. After accepting the terms I thanked the supervisor for her time and more importantly took down a reference number (always, always, always take down reference numbers. This way if something or someone doesn’t follow through on your phone call, you can call back and someone can look up the reference number and pick up where you left off).

 

The Strategy – As a recap here are some key takeaways when negotiating credit card debt.

Be Kind – It’s so important to be kind but firm to the Representatives on the other line. Keep the approach “you catch more flies with honey than vinegar” in your mind. Between holding times, language barriers, and the Representatives not listening to your needs at times, it can be a really frustrating process. But remember to keep your cool!
Be Persistent – In the first point I made in this blog I mentioned to lay out your game plan. Know what you want to get out of your phone call. Every time I negotiate I physically write my goal down. If the conversation gets away from me, I have my goal and what I want to accomplish written down right in front of me, to get me back on track.
Leverage Yourself – The only reason I was able to meet my goal is because I had leverage. I knew I was a great customer of to my credit card company. In order to get reciprocation you need to be a valuable client. If I never paid my bills and had outstanding credit card bills, ten to one they wouldn’t have been as flexible with me.

Conclusion – So what do you think? Next time you have a large credit card balance will you try to negotiate your terms to save some money? Let us know in the comments below!

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