Can I get a reduction if I pay off my card debt in full?

billy_bulldog

I am soon to be in a position where I can just about afford to pay off all my credit card balances in full (from the proceeds of a house sale). I know from previous experience that once you are in arrears and on a payment plan, lenders often offer a reduced settlement figure to try to get you to clear the full debt, however I am not in any kind of arrears or trouble now, so does anyone know if there is any way I can get something knocked off the balance if I offer to clear the balances in full?

Any tips, advice or comments greatly welcomed.

Eydon

You can ask, but I wouldn't hold out much hope. Afterall, as things stand you are paying what is due on time and the bank is making money out of you. They have no reason to come to an agreement for anything less than the full amount.

Also, if by some miracle they do agree to a reduced payment, it will show on your credit file and affect your ability to get credit for the next 6 years.

ironlady2022

I think you are just trying to get out of things. You ran up the debt so face the consequences. No wonder the country is in a turmoil, people like yourself who've spent thing and wanting a reduction?

STSAVER

mayling03 wrote: »

I think you are just trying to get out of things. You ran up the debt so face the consequences. No wonder the country is in a turmoil, people like yourself who've spent thing and wanting a reduction?

Appreciate where this sort of comment is coming from, and agree with you somewhat, but if this person is anything like myself, the banks have probably already made a very healthy amount of profit from the interest charges that they have imposed on the balances outstanding.

on a £5k balance for example, at a APR of 21% you're being charged around £87 per month in interest - over £1000 per year. Minimum payments would be around £100 per month, so you're only reducing the balance by £13 per month (£156 per year). Over say 5 years, you'd still be owing over £4k in all likelihood and the bank would've had charged you over £4k in interest for the privilege. Even if they offered a reduced settlement of £2k they've still made a very good profit from you.

[Deleted User]

STSAVER wrote: »

Appreciate where this sort of comment is coming from, and agree with you somewhat, but if this person is anything like myself, the banks have probably already made a very healthy amount of profit from the interest charges that they have imposed on the balances outstanding.

on a £5k balance for example, at a APR of 21% you're being charged around £87 per month in interest - over £1000 per year. Minimum payments would be around £100 per month, so you're only reducing the balance by £13 per month (£156 per year). Over say 5 years, you'd still be owing over £4k in all likelihood and the bank would've had charged you over £4k in interest for the privilege. Even if they offered a reduced settlement of £2k they've still made a very good profit from you.

A resaonable point - but it does ignore those who run up large balances and then pay nothing back. The interest rates account for the fact that a % of people - around 10-15% as a current industry average and much higher on certain cards - pay very little back of what they've borrowed.

The harsh fact, as with most things, is that the good guys pay for the bad.

lilac_lady

I don't think you'll get a discount but you'll feel great once you've cleared the cards.

ironlady2022

STSAVER wrote: »

Appreciate where this sort of comment is coming from, and agree with you somewhat, but if this person is anything like myself, the banks have probably already made a very healthy amount of profit from the interest charges that they have imposed on the balances outstanding.

on a £5k balance for example, at a APR of 21% you're being charged around £87 per month in interest - over £1000 per year. Minimum payments would be around £100 per month, so you're only reducing the balance by £13 per month (£156 per year). Over say 5 years, you'd still be owing over £4k in all likelihood and the bank would've had charged you over £4k in interest for the privilege. Even if they offered a reduced settlement of £2k they've still made a very good profit from you.

You may say that but people do sign an agreement form of some type to agree to all terms and conditions. No one forces them into signing. And people know that if you do borrow at 'x' apr rate that is what they pay back. Some people 'think' they will not get sucked in but they do and get out of control. This OP is in control and STILL wants a discount????

STSAVER

mayling03 wrote: »

You may say that but people do sign an agreement form of some type to agree to all terms and conditions. No one forces them into signing. And people know that if you do borrow at 'x' apr rate that is what they pay back. Some people 'think' they will not get sucked in but they do and get out of control. This OP is in control and STILL wants a discount????

I'm not advocating that people paying back reduced amounts is good or acceptable.

Been through similar situation myself i.e. being an idiot and losing control and putting self into far too much debt. Accepted it, dealing with the consequences.

However, the banks have to also realise that they also play a part in it. Things are changing, but for too long they were happy to keep people in too much debt and keep charging them ludicrous amounts of interest. Risk and reward is used as an easy excuse at times I feel - if banks carry out the required checks they can work out whether someone is really struggling then they should be more prepared to help by charging more reasonable interest rates on the accounts concerned, so that minimum payments start clearing the debt so that they get all their capital & interest back rather than only some.

I've contacted various lenders over the years because of my problem, and certain companies have had zero interest in helping me. Whereas others have accepted there's a problem, reduced the interest, set an agreed minimum payment which is reasonable etc and funny enough, they are the ones that I am clearing in a reasonable period (and once I get all cleared, I will keep one card on my record - and it will be one of the companies I found most helpful).