If you recall, last time I addressed the need to call your credit card companies and negotiate a reduced interest rate. Well, yesterday's "New York Times" had what I found to be an interesting and inspiring article for anyone facing difficult economic times and especially for those struggling with credit card debt.
In an article titled "Credit Bailout: Issuers Slashing Card Balances," writer David Streitfeld states that "credit card companies are increasingly doing something they have historcally scorned: settling delinquent accounts for substantially less than the amount owed."
Streitfeld cites a gentleman from Chicago named Edward McClelland who reportedly had received several phone calls from a credit card company, regarding a "$5,486 balance." This time, Mr. McClelland had a proposition for "big business." Specifically, McClelland "proposed paying half" of this balance.........and the account representative replied, "It's a deal" at which point, Streitfeld writes, "the matter" was considered "even."
Apparently, credit card companies and banks are becoming more responsive to the plight of many Americans during this recessionary period. No, they are not, all of a sudden, becoming philanthropic and good-natured, but it seems that they are becoming more open to negotiation.
With delinquencies rising, they realize that some money is better than no payment at all. In the article, Streitfeld cites a Federal Reserve report which states that "6.5 percent of credit card debt was at least 30 days past due in the first quarter, the highest percentage since it bagan tracking the number in 1991. The amount being written off was also at peak levels."
Streitfeld continues that not all creditors are on board with this new policy, but the American Bankers Association, "acknowledges that settlements are becoming more common."
Unemployment is now more than nine percent and is likely to rise. Frequently, jobs are the last things to come back during an economic recovery. Thus, as jobs continue to decline, credit card debt and the inablilty to pay will increase.
On a positive note, we now know that there is some "wiggle room"; the potential for negotiation exists. If you are struggling with debt, make that call. I beleive it is better to be proactive and contact the card company yourself than to wait and hope that the company will call and "make you an offer."
Re-read my previous post "Call...And Save!" with regards to negotiating a reduced interest rate. Read Mr. Streitfeld's article in its entirety in the June 16 edition of "The New York Times."
Also, I encourage you to read my blog every week.