How to Get Your Creditor to Minimize Your Balance

With mounting interest rate charges, paying down your credit card balance may seem daunting--if not impossible. Unfortunately, consumers who choose to pay only the minimum payment due each month will see very little impact on the overall balance of their credit cards. Fortunately, options exist for negotiating with your creditors to reduce your balance and help you get out from under the staggering amount of debt that confronts you and moves you closer to financial collapse.

Instructions

1

Take a look at your current financial situation before contacting your creditors. Make a list of all credit card and consumer loan debt, including the balance and interest rate of each. Arrange the list so that the credit accounts with the highest balance appear at the top of the list. Make note of credit accounts with low balances but high interest rates. The goal is to identify the accounts that will provide you with the most benefit from a balance reduction.

2

Calculate how much you can afford to pay and what type of offer will work best for you. When speaking with your creditors, you will want to be able to offer them an attractive option for settling your account for less than the actual balance. Decide if you will need to still make monthly payments to satisfy the balance or if you can afford to make a lump sum payment equal to a specific percentage of your balance.

3

Contact the creditors that represent the highest balances or highest interest rates and request a reduction in your balance. Plead your case with your creditors by explaining your financial situation. For instance, if you are delinquent on the account, provide them with the reason why, such as job loss or reduction in wages and ask them to arrange a repayment plan you can afford. Stress your desire to repay the debt and ask them to reduce the balance so you can make an effort to pay as much as possible before the company has to write-off your debt and sell it for pennies on the dollar. In many cases, creditors prefer to receive some portion of the debt instead of having to sell your account to collection agencies. If you are current on your account, explain the overall impact a growing balance will have on your ability to continue paying on time and ask for help, in the form of a reduced balance, before you fall behind.

4

Act in a persistent manner. Call and talk to a different representative or supervisor if you don't get the answer you want the first time. Persistence often pays off in these situations. At the very least, offer an alternative to a balance reduction, such as a reduced interest rate or elimination of late fees. Your goal is to prevent the balance from escalating by reducing or eliminating late fees and interest charges. Over time, a reduction in the interest rate will help reduce your total balance and may be an alternative to a one-time balance reduction.