How to Negotiate a Credit Card Balance Settlement

Credit card companies extend credit to customers the company considers good risks. While most customers begin their relationships with credit card companies fully intending to handle credit responsibly, they may run into trouble if they don't understand how credit works, how to keep their balances low or if they experience financial problems. Credit card companies are willing to work with customers who have run up large balances they are unable to pay--they would often rather get some money rather than none, so it benefits both customer and credit card company to work together.

Instructions

1

Read your credit card statements and write down the most recent balance. Look at the current minimum payment due. If it is more than you can comfortably pay, you have some choices to make. Ideally, you want to negotiate about 50 percent of your current balance, according to CreditCardDebt.com.

2

Look over your checking and savings account balances and your current monthly budget. Be clear about where you currently are financially and where you were when you applied for your credit card. Decide where you want to be when you settle your debt, according to CreditCardDebt.com. Decide whether you want to offer a lump-sum settlement, make a workout arrangement or work with a debt management company. A workout arrangement is an agreement between you and the credit card company which either lowers or eliminates your interest rate and stops adding punitive fees to your balance. CNN Money defines a workout arrangement as "an informal repayment or loan forgiveness arrangement between a borrower and creditors."

3

Call the credit card company and let them know you want to negotiate the debt you owe. Paint a picture for them of where you are financially, letting them know that while you want to pay the full amount, you can't do that. Offer to negotiate with the company so you pay a part, ensuring they get some money rather than none, according to ConsumerReports.org.

4

Discuss your options with the credit card company. These include making a lump-sum payment for less than the full balance or agreeing on a workout arrangement, according to Consumer Reports.org.

5

Negotiate a settlement with the credit card company that allows you to pay at least half of the balance owed, according to Consumer Reports.org. This option is better for you than trying to work with a debt management company that is more interested in taking your money than settling your debt.

6

Prepare to pay the IRS if the amount the credit card company forgives is more than $600. This is considered income, which you have to pay taxes on, according to Consumer Reports.org.