How to Negotiate with Credit Card Companies During COVID-19

• Author: Jacob Greene
• Posted: 2024-08-02

If you are one of the millions of people who have lost your job and have seen your expanded unemployment benefit run out, you likely find yourself with bills coming due. One of your major debts may be to the credit card company. You may find your debt metastasizing under the weight of high interest rates you are paying. Accordingly, you may need to try to negotiate with your lenders. Here are some tips for when you need to negotiate with your credit card company.

The first thing that you need to do is some research to understand your options. It helps to know where you stand when you make the initial phone call to the credit card company. You should know what is available to you and what you should be asking for when you call. An informed consumer is one who is a more effective negotiator.

Explain All of Your Circumstances When You Call

When you call the credit card company, be prepared to explain to them your whole situation. Do not be embarrassed to describe the extent of your financial hardship. After all, the worse of a situation you are in, the more they may be willing to negotiate with you. While you do not necessarily have any leverage when you negotiate, you should also recognize that the credit card company does not want you to be in a position where you have to file for bankruptcy. Since they are an unsecured creditor, they will be lucky to end up with pennies on the dollar in bankruptcy court if they get anything at all. Accordingly, you may find them willing to work with you more than you think.

After you explain your situation to the credit card company, they may tell you what programs they have available. Listen to what they describe and see if it matches the list of programs that you learned about from your research. If there are additional programs that they did not mention, be sure to ask about those too.

When you negotiate with the credit card company, be mindful of the fact that the more you get from them, the more likely it is that your credit will be affected. For example, if they settle your debt for less than what you owe, it will count against you on your credit score. The credit card company may also close your account or cut your credit limit. In other words, you may be saving some money by not having to pay your full bill, but it will come at a cost.

It Never Hurts to Ask

During the negotiation, it never hurts to ask the question. You are free to ask for anything that you want when it comes to repayment. The worst answer that you can get is no. Even if the credit card company is not willing to give you what you want, asking the question can be a conversation starter for them to make another concession to you.

If the credit company does not offer a settlement or you are not willing to bear the other consequences, you want to get more time to pay your bill and a lower interest rate. If you cannot get a settlement or a workout plan, the next best option is a hardship plan. This will give you more time to pay your bill and a lower interest rate while you are doing it. There will still be negative impacts on your credit score, but you are working to pay off your debt. You can also negotiate a payment plan that works better for you.

You May Get Some Flexibility During the Pandemic

Many credit card companies are more willing to work with you during COVID-19. Most have held themselves out as having programs to help people who have lost their jobs or are otherwise in financial need. Thus, you will find these companies more willing to work with you now than in the past. The flip side is that credit card companies will now have very defined criteria that they are working with when it comes to giving you relief. While they will be flexible, they may be less willing to settle your debt given the sheer number of people who are all likely asking the same question. However, it never hurts to try to work something out because you can get some flexibility.