Negotiating Lower Payments Starts with a Strategy

Begin by collecting all your credit card account information. Once everything is organized, write out the balance, interest rate and your monthly payments for each card. This will help you determine which debt(s) should be paid first.

You'll especially want to focus on high-interest cards with high balances. One way to make this debt more manageable is to contact the credit card company and request a lower interest rate. You might be surprised at how receptive the creditor is to your request.

If you've demonstrated a reliable payment history, you should have no problem lowering your interest rate and, ultimately, your outstanding balance.

How to Demonstrate a Reliable Payment History

Missing payments on any outstanding balance has a negative effect on your credit score. (If you have a low credit score, click here for free do-it-yourself credit repair information.) What's more, it decreases a creditor's confidence in your ability to pay off your debt.

If you fail to make one payment, the consequences aren't too severe since most lenders understand an occasional mishap. But once you approach three missed payments, creditors begin believing that there's a good chance you will not repay them.

If you are unable to make a monthly payment, it's best to pass up an account with a low balance. From a creditor's perspective, the potential to lose money is much less than with an account that has higher debt.

Use These Tips When Talking to Creditors

As with most situations, being as polite as possible will literally pay off when you talk to creditors. Don't be afraid to use the person's name who you're speaking with. Also, explain your strategy for eliminating your debt and leave yourself open for suggestions.

During the call, take notes and record any information the creditor provides, including his/her name, the date and time. Taking this step ensures you have documentation to use during future conversations.

You may also want to inquire about what information will be reported to the credit bureaus. You have the right to discuss this aspect of the negotiation process.

The Final Step: Create a Monthly Budget

Now that you've gone through the effort of negotiating your debt, create a payment schedule and develop a monthly budget. You can start by subtracting your expenses from your monthly income. If you're spending more than you make, then it's time to determine whether you're using money on items you need or objects you want.

If you have money remaining, divide that total among your outstanding debt payments. As mentioned earlier, give priority to paying off the balances with the highest interest rates and shortest terms. Automatic bill pay from your bank account is one way to keep your budget on track.

Learn more ideas for lowering your credit card payments. You can also fill out this form today to receive more free advice about negotiating lower payments to your creditors.