How to negotiate credit card debt

You may be able to reduce your monthly interest payments or how much you owe in total

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Credit card debt is a major problem for many American households. According to Experian, the average credit card balance in 2022 was $5,910. This debt typically has a high interest rate and can easily spiral out of control. Some borrowers may find it necessary to negotiate credit card debt due to their financial situation.

Here's how to negotiate your credit card debt, plus a few resources to assist you if you need help.

Key insights

  • You can successfully negotiate your credit card debt without an attorney or third party.
  • Negotiations may result in a lower balance, interest rate or monthly payment.
  • If initial negotiation efforts are unsuccessful, try again later with a different representative from the credit card company.

Can you negotiate credit card debt?

It is possible to negotiate your credit card debt. However, it’s unlikely that you’ll be able to wipe away your debt completely. If you’re successful with negotiations, you may be able to reduce your balance and repay it in a lump sum or in installments over time.

Typical repayment plans when negotiating your credit card debt include:

  • Lump-sum payments: The credit card company accepts a lower amount in exchange for paying off the balance with a single payment.
  • Short-term repayment plans: You'll repay the remaining balance with a few equal monthly payments.
  • Long-term repayment plans: Your ability to make payments may require a longer repayment plan of one or more years.

In addition to reducing the amount owed, the card issuer may also agree to a reduced interest rate to make it easier to pay off the remaining balance.

Credit card companies are sometimes willing to negotiate with customers if you explain your financial situation. Overall, the card issuer wants its money back and knows that it will get more back through negotiations than it will if you file for bankruptcy.

Lauren A. Helbling, a Chapter 13 trustee in Cleveland, suggested that "creditors need to be convinced that you cannot pay the entire debt. Therefore, you must stop payment, and then you must show them financial statements to prove you cannot pay. Then you may be able to settle. This will negatively impact a credit score."

» MORE: How to get out of debt

How to negotiate credit card debt

To achieve the best results when negotiating your credit card debt, you need to be prepared. Follow these simple steps to increase your odds of success.

Review your debt
Before you begin negotiations, review your debt and pay attention to certain details of your account. Consider how much you can realistically afford to repay given what you owe. Calculate how much interest you've paid over the last year by looking at past statements. Also, determine how long your account has been open; if you can demonstrate that you've been a good customer for many years, the creditor may be more willing to negotiate with you.
Contact your credit card company
Once you've compiled some talking points about your account, it’s time to contact your credit card company. While the first step is speaking with customer service, it’s very unlikely that one of these representatives will have the authority to negotiate your credit card debt. Instead, you’ll be transferred to the debt settlement or financial hardship department.

When you speak with this department, be sure to reference your payment history and income. Having a history of on-time payments shows good faith on your part to repay your debt. Sharing your proof of income helps them understand your current financial situation and the need to negotiate the debt.

Review your options
When negotiating credit card debt, there are a number of potential outcomes. Ideally, the credit card company will lower the debt substantially, but that's not always the case. Here are a few options you may receive (starting with the most likely):
  1. Lower interest rate: The credit card company may reduce your interest rate. This will also lower your required monthly payment amount, which could make repaying your debt more realistic.
  2. Paused payments: A temporary pause in monthly payments gives you an opportunity to get on a better financial footing. The credit card company may agree to waive interest during this period so that your balance doesn't increase while you skip payments.
  3. Switching to a different card: You may be able to switch your balance to another credit card that the issuer offers with a lower annual percentage rate (APR). For instance, the issuer might have a card with a promotional 0% intro APR on balance transfers for anywhere between 12 and 21 months.
  4. Settlement: A card issuer may agree to settle your credit card balance for less than what’s owed in exchange for closing your account. This is typically a last-resort option that a card issuer may agree to in order to avert the possibility that the cardholder will file bankruptcy and the issuer won’t collect any of the cardholder’s debt. The issuer may accept a lump-sum payment or allow the reduced balance to be repaid over time.
Get your agreement in writing
When negotiating your credit card debt, always get your final agreement in writing. Negotiations tend to happen over the phone or in person, so getting the details in writing avoids confusion or backpedaling. Some credit card company employees may verbally promise compromises that they don't have the authority to offer. Unless it’s in writing, it’s your word against theirs.

The written document should include all the details of your negotiations, including your new balance, interest rate and monthly payment amount.

Be persistent but polite
The goal of a credit card issue is to make money, so you must be persistent in your negotiation efforts. But, remember, they’re humans too, so you have to stay polite. By keeping a cool demeanor, you can negotiate effectively without getting emotional.

If your negotiation efforts aren't working, try again at a later time. In some cases, you can hang up (again, politely) and immediately try again with another employee. They may be more understanding of your situation and more willing to negotiate a deal that works for you.

Where to get help with credit card negotiations

If you're worried about negotiating for yourself or you’ve already tried and had trouble meeting your goals, it may make sense to involve professionals in the negotiations. These professionals may help you achieve better outcomes with credit card companies.

Debt settlement companies negotiate with your creditors on your behalf. These companies often use hardball tactics, like encouraging you to stop payments on your credit card debt completely, which may motivate credit card companies to agree to a more generous settlement. While this approach could result in a bigger reduction of your debt, skipping payments can wreck your credit and have lasting effects on your ability to borrow in the future. Additionally, you’ll likely pay the debt settlement company fees between 15% and 25% of the debt enrolled to be settled, and you may end up owing taxes on the amount forgiven.

Credit counselors can help you negotiate your debt (although not in the same way as debt settlement companies) and also provide financial counseling so you can avoid debt in the future. Credit counselors can negotiate with creditors on your behalf to reduce interest rates and/or extend repayment terms, resulting in a more affordable monthly payment. Unlike debt settlement companies, however, credit counselors typically do not negotiate to reduce your balance owed. Successfully completing a credit counselor’s debt management plan can improve your credit score over time, and the fees you’ll pay for the plan are usually far more affordable than what you’ll pay a debt settlement company.

» MORE: Best Debt Consolidation Loan Companies

Could your debt be reduced or forgiven? Take our financial relief quiz.


    Do credit card negotiations affect your credit score?

    Credit card debt negotiations may or may not affect your credit score depending on how the negotiations are handled and what their outcome is. Negotiating a lower interest rate from the credit card company shouldn't affect your credit score. But a debt settlement can substantially reduce your credit score, particularly if you stop making your card’s minimum payments during the settlement negotiations.

    Is there a credit card forgiveness program?

    While most credit card companies won't forgive your balance entirely, you may be able to negotiate a reduced balance. Contact your card issuer’s debt settlement department to explain your financial situation and explore your options.

    What happens if you don’t pay your credit card bill?

    If you don't pay your credit card bill, it sets off a chain of events. At first, you may be charged late fees and a penalty APR by the card issuer. If the bill still hasn’t been paid 30 days after its original due date, the card issuer will likely report the missed payment to credit bureaus. If 180 days pass without a minimum payment, the account will probably be closed and written off as a loss, which will stay on your credit report for seven years and can significantly damage your credit score. Depending on the size of your unpaid credit card bill, the card issuer may also file a debt collection lawsuit to get a judgment against you and attempt to garnish your wages to repay the debt.

    What percentage of debt will a credit card company forgive?

    The amount of debt forgiven by a credit card company depends on how much you owe and your current financial situation. Generally, card companies won't forgive your entire balance, but it's possible to negotiate a big reduction. You may be able to lower your balance by as much as 80% if your finances are truly in bad shape.

    Bottom line

    Credit card debt can be one of the most expensive forms of debt because it usually carries very high interest. When credit card debt overwhelms your finances, consider negotiating with your card’s issuer. Negotiating effectively might give you a lower interest rate, a balance reduction or more affordable payments. If you're uncomfortable with negotiating independently, you can work with an attorney, credit counseling organization or debt settlement company to negotiate on your behalf.

    Article sources
    ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
    1. Experian, " Average Credit Card Balances up 13.2% to $5,910 in 2022 ." Accessed March 29, 2023.
    2. Consumer Financial Protection Bureau, “ What's the difference between a credit counselor and a debt settlement or debt relief company? ” Accessed March 2, 2023.
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