Consumers Urged to Negotiate for Lower Rates

Rising credit card debts and fewer on-time payments are troubling many card companies to the point where most issuers would gladly negotiate with debt-ridden clients. This, according to credit industry experts. Although delinquency and charge-off rates have dropped slightly in recent months, financial analysts say that the millions of American cardholders who have substantial debts can still affect the credit industry’s recovery.

If there is any upside to the turmoil that card issuers are in, according to analysts, it’s the dramatic shift in policy when it comes to delinquent cardholders. In the years leading to the recession, card companies rarely entertained debt negotiations with their clients. Huge losses due to defaults, however, are slowly making card issuers more open to the thought of dialogue with their delinquent cardholders.

With the looming implementation of a milestone credit card legislation next year, analysts are expecting banks and card companies to increase rates while they still can and resort to other cost-cutting measures like slashing credit limits and closing down bad accounts. As a result, consumers are bearing the brunt of the card issuers’ sudden aggressiveness. Even so, the tough economy is forcing some companies to open their doors to cardholders who want to negotiate their outstanding balances.

Credit specialists say that with no definite end yet in sight for the economic recession, card companies are becoming increasingly competitive. In fact, experts say, some issuers are even encouraging select clients with debts to negotiate their balances. Analysts contend that card issuers would prefer to get any payment from cardholders than not get anything at all. With this principle in mind, they add that consumers fortunate enough to avail of negotiation programs can slash up to 50 or even 70 percent off their current debts.

Of course, not all cardholders can avail of negotiation programs. Card companies would most often choose customer who have displayed or possess the qualities they are looking for. Also, analysts say that card issuers and banks look at the cardholders’ financial history and in some cases, financial distress situations.

Experts further contend that loyalty would often be of great importance when it comes to bargaining with the card companies. Customers who have been with the financial institutions for a long time can expect to get better rates and reduced balances if negotiations go well.

Consumers also have to convince card issuers that they are worthy enough and responsible enough to take charge of their finances and manage credit better. Industry analysts point out that card companies rarely give erring cardholders second chances, hence the need to be extra cautious after being given substantial debt reduction.