How to Offer Less Than the Balance to Pay Off a Credit Card

Offering less than the balance to pay off a credit card is a debt management strategy known as debt settlement. Credit card companies sometimes will agree to settle for less than the full balance after accounts are 90 to 180 days behind, according to MSN Money. At that point, the card company begins to suspect that the account holder may not make resume making regular payments, causing a default on the account. A card company may prefer to settle for less than the full balance rather than risking not collecting anything at all.

Instructions

1

Check your credit card statement or call the company to determine the status of the account. Confirm the balance and that the account is at least three payments behind. Also, the card company may have placed the account with an outside debt collection agency, meaning you will have to contact the debt collector to settle for less than the full balance. Get a contact number for the debt collector if this is the case.

2

Contact the credit card company or debt collector by telephone once you are ready to settle. The Wall Street Journal's SmartMoney.com reports that card companies and debt collectors will sometimes agree to settle for 20 percent to 70 percent of the balance on delinquent credit card accounts. Making an offer by mail to settle is also possible, but negotiating by telephone is usually faster.

3

Raise your offer if the card company or debt collector refuses to settle for 20 percent. The success of your negotiation hinges on how much the card company or debt collector is willing to accept and your willingness to hold out for a settlement you can afford. The agreement is purely voluntary on both sides, and the card company or debt collector could demand, for instance, 80 percent of the balance and not move off that position, at least initially.

4

Contact the card company or debt collector each month if your early efforts to settle the debt fail. Gradually raise your offer each time without exceeding what you can afford. Stay with the process until you have a deal. Get details in writing before making payment for less than the full balance.