How to Negotiate With Credit Card Companies

Before one can think about investment and accumulating massive wealth, it is essential to get rid of credit card debt. Late payments can result to a sharp increase of late penalties and massive interest charges. This may subsequently make it more difficult to progress. If you are on the brink of such despair to such an extent of even considering or declaring yourself bankrupt, then you may want to consider a debt negotiation process. Debt negotiation can wipe out up to 75% of your debt. And most importantly, this can be done without declaring bankruptcy!

• Your creditor’s main goal is impressing the shareholders.
• They want to get the most money out of you as possible.

The vast majority of credit card companies are owned by banks. Before you are considering how to negotiate with credit card companies it is extremely helpful to know that the credit card companies priorities are. The first priority of any credit card company is to make the most profit it can for its shareholders. Believe it or not, many people are shareholders of credit card companies without even knowing it. If you have an IRA or 401k plan that invests in mutual funds, you are likely a ‘part owner’ of a credit card company. Pleasing the shareholders is job #1 for all credit card companies, so how does that translate into their interaction with you? This means that they want to collect the full balance on your account.

• It is actually costly for collection companies to call you
• If they are willing to spend to get payment, then it is reasonable to assume they would be willing to negotiate for less than the full balance on your account.

There is a tipping point where it becomes cheaper (and thus more profitable for them) to accept less than the full balance of your account. This may not seem obvious at first, but there is no doubt this is true. If they have to call you 100 times before you remit payment on your account, they have to pay the employees to place the phone calls. All this effort adds up to a substantial amount of money in the long run. This effect is made even more pronounced when you factor in a simple finance concept called “the Time Value of Money”. In layman’s terms, this principle states that money now is worth more than the same amount of money at a later point in time. So once they calculate that they can actually save money by accepting less than the full balance amount, they are willing to do just that!

• Companies feel pressure to accept whatever money they can get in some situations
• They don’t care about punishing you for not paying, as much as they care about getting whatever money they can from you – including less than the full amount you owe them.

Settling allows the banks to avoid a situation whereby they would be faced with a possibility of “charging off” the amount stated on their income statements, an event that (when occurring in large numbers) leads to the fall of stock prices. Fall of stock is never a friendly phenomenon to companies since it often results in lower bonuses to the management and even reduced dividend payments to the company’s shareholders. This will not happen due to a single default. However, when there are several thousand people that are experience the same thing, the stock price may fall due to an abundance of write-offs. You can see now that you actually have more leverage than may have first guessed.