The average household in America now carries nearly $10,000 in
credit card debt, a figure that will probably continue to rise
as the economy struggles. People use their credit cards during
good times and bad, but during bad times the bills tend to get
paid in full less often. The costs of maintaining that $10,000
balance can be quite steep, especially with some credit card
interest rates exceeding 20%.
In the current economy, with many people either out of work or
underemployed, many families struggle to make the minimum
payment on their credit cards each month, which amounts to at
least 2% of the outstanding balance. Recently passed bankruptcy
legislation will soon make it more difficult for those who are
struggling with their bills to file for bankruptcy. What can you
do if you cannot pay your bills and you cannot or do not want to
file for bankruptcy?
You could try negotiating with your credit card company.
Depending on your credit history, current balance, payment
history, and the interest rate on your credit card, you may be
able to negotiate with your credit card company to improve the
terms on your account. The easiest thing to do, particularly if
you have no history of paying late, is simply to call your
credit card company and ask them if they will lower your
interest rate. With competition among credit card companies
rather fierce these days, you can simply tell your credit card
company that you have received a better offer in the mail and
that you may cancel this account in order to accept the more
favorable one.
Under these circumstances, they may agree to lower your rate. If
you have a history of paying late, you are probably out of luck.
That may be ironic, since paying late is probably what has
caused your interest rate to be high in the first place. Still,
it's worth a phone call, as the worst they can do is refuse.
If you regularly pay your bills on time, lowering your interest
rate is probably all you can do to improve your situation with
your credit card company, as they tend not to be too sympathetic
towards customers that pay promptly. If, on the other hand, you
are at least three months behind and are carrying a large
balance, you may have some additional negotiating leverage. That
sounds rather contrary, but the credit card companies do worry
about being paid by their customers with payment problems.
They might be willing, for instance, to settle your debt for
less than the amount of your balance if you agree to pay your
debt all at once. You may be able to arrange a lump-sum payoff
on your balance for less than you owe. Granted, this requires
that you have the available cash, but if you can arrange to do
so, you may benefit. The credit card companies would much rather
settle a debt for less than the full amount than send the debt
to a collection agency. This type of settlement is not without
its own complications, however. What if you don't have the money
to settle all at once? That's likely, or you would have been
paying your bills all along. Worse, settling for less than the
full amount will show up as a negative entry on your credit
report, and it will stay there for seven years.
Your credit card company may or may not be willing to work with
you on a payment plan. The details will be determined by your
payment history, interest rate, balance and a number of other
factors. It doesn't cost you anything to call them and ask them,
and it may be less expensive for you to negotiate with your
credit card company than it is to hire a debt consolidation
agency. If you have a substantial credit card balance and you
cannot make your payments, calling your credit card company is
worth a try.
Talbert Williams offers debt consolidation referrals and
advice. For more information, articles, news, tools and valuable
resources on debt solutions, visit this site:
http://www.1debtfreedom.com
About the author:
Talbert Williams offers debt consolidation referrals and
advice. For more information, articles, news, tools and valuable
resources on debt solutions, visit this site:
http://www.1debtfreedom.com
