Tips to negotiate debt with your credit card company

Whether you need to take care of debt that’s above or below average, you might not realize a free, simple method could get you help from an unexpected place. It starts with a phone call.

The road to get out of debt

First, get a good idea of how much you can afford to put toward your debt, either in a monthly payment plan or a lump sum.

When you only pay the monthly minimum (or less) on a hefty balance, your debt likely will drag on for months or years, and your interest rates almost certainly will shoot up. You risk getting stuck in a cycle where the amount you owe keeps increasing even when you’re making payments, and a bad credit score means higher interest rates when you borrow in the future, eventually hurting your chances to secure the best price on a car loan or find a low mortgage rate.

When you know how much you’re prepared to pay on your credit card debt, it’s time to negotiate. That’s right: You can try to talk your way out of some of your debt.

Believe it or not, your lender probably wants to help

Simply asking your bank or other credit card issuer for a better deal is worth a try.

Requesting a new repayment plan or an agreement to settle your debt outright is a frequently used strategy to negotiate with your credit provider.

Contact the card issuer and ask, politely but confidently, if you can work out a payment plan. Be prepared to detail how much you can pay. While there are different areas you can negotiate, you’ll want to start out with the offer that saves you the most money and gets you out of debt fastest.

Given the chance, most card issuers are more than willing to work out a deal with you rather than risk you defaulting on the account and not paying anything.

Most importantly, stick to the terms of your new plan. If you don't, the credit card company will be less inclined to work with you further. Only agree to payments that you can manage until the debt is gone.

Different types of renegotiated payment plans

Ask to stop your interest

Request a plan to make monthly payments against the principal — the total charges you racked up before interest started collecting.

The card issuer may close the account, and you keep paying the debt, but new interest charges stop.

Or the lender may forgive the interest you owe and divide the remaining balance into manageable payments. Either scenario keeps your debt from growing any larger.

Offer a lower lump sum payment

You also can try to negotiate a large one-time payment that is less than your balance, but the bank would accept the amount to pay off and close the account. For instance, if your balance including the interest and fees reached $5,000, you could offer to pay the amount of your original credit line of $3,000.