Credit cards are an excellent payment instrument that allows you to opt for short, medium and long-term financing to pay for products or services with bank money as a revolving loan. But if you don’t know how to control the expenses we make with it, credit card debts can easily go beyond the limits of our budget. That is why it is important to know how to negotiate a credit card debt in order to know what to do in this situation.
How to negotiate a credit card debt?
By using the credit card we are making use of the bank’s money, which lends it to you in exchange for an interest rate. But it can happen that, between buying and buying, let’s forget that the credit card is not a magical variety that allows us to pay everything we want without more. Without realizing it, you can have a fairly high debt on your credit card.
At that time you will realize that paying it went completely out of your budget and you cannot pay it in the short term. If you wonder what to do, you’ll be glad to know that there is an option: negotiate your credit card debt. But how will you do this?
The first thing you should do when you realize that your debts have gotten out of control is to keep the debt from growing. Keep your credit card if it is a temptation and avoid using it. Then you can negotiate your debt through several alternatives:
- Frozen debt with fixed installments: One of the options offered by the bank to negotiate a credit card debt is to freeze your credit quota and agree to the payment in fixed installments over a certain period. This is one of the most common ways to negotiate your debt, and to do so you must go to the bank and present your situation. This method implies that you will not be able to use the credit card until you have settled your account.
- Repairing the debt: Another way to negotiate your credit card debt is repairing it, that is, restoring the original terms and conditions to change the modality and extend the fees to decrease the term, or increase the term by decreasing the fees.
- Sell your debt: You can request the sale of your debt to another bank that has better interest rate conditions. This is another way to repay credit card debt.
- Go to a debt manager: These companies are management agencies that offer you debt management plans and help you pay them with a detailed schedule according to your needs.
Advantages and disadvantages of negotiating a credit card debt
When negotiating a credit card debt you have better conditions to pay your debt, which represents a great advantage and a relief for you, since it prevents you from entering the lists of the risk centers and keeping your credit history clean. It also prevents your credit card from being canceled by the bank because of default.
However, negotiating a credit card debt also has its disadvantages:
- Your credit can be frozen until you pay the debt.
- Your credit score and quota may decrease.
- It will be more difficult to access other credit products of the bank.
- You can end up paying more than the original debt as interest increases.
- You can incur additional costs for fees of the companies that manage the debt, which generates more debts.
Negotiating a credit card debt
It is an alternative if your debts exceed your ability to pay . However, the recommendation is:
- Do not borrow more than you can pay,
- Watch your expenses with the credit card,
- Check how much your card’s interest rate is and propose to pay your debts in the short or medium term,
- Avoid making cash advances since interest can exceed 100% of what you get,
- Don’t pay only the minimum since those are only interest and your debt will remain intact,
- Avoid having several credit cards, one or two is enough, and
- If you have more than two cards, pay first the one that generates more interest.
In this way you can make efficient use of your credit cards and you will not have to negotiate the debt.