I have been getting offers to call and seek assistance to settle with credit cards. I have so far not considered these but have I missed a trick?

Should anyone ever consider these under any circumstances or are these snake oil?

For additional context that applies to me (perhaps not for everyone in my situation) is that I currently have most balances on 0% APR cards and can pay off the debt before the promotion period expires. That said, the wordings from the 3rd party companies (not the credit card companies) makes it sound like I shouldn't even be paying so much. So I was wondering if I am being a donkey by paying my debt instead of attempting to bargain and settle.

Please note, my specific case maybe one thing but a majority of the question should still be treated as is it worth considering to take up settling.

  • 8
    how far behind are you? How much debt do you have? Who is calling, is it a 3rd party selling a service or the credit card company? Apr 20, 2019 at 11:41
  • Sorry I was out on a vacation without much internet. @mhoran_psprep I have been getting mails by 3rd party companies. May 3, 2019 at 22:58

3 Answers 3


That's quite an edit you made to your question! You are basically asking:

I borrowed money. I can afford to pay it all back, but should I?

Why wouldn't you pay it all back? The concept of debt settlement, as well as other types of loan forgiveness, all revolve around a basic assumption that at the time of purchase, you had both the means and intention to pay off the entire loan in the future. But despite your best intentions, at some time later your circumstances changed such that you could no longer afford the payments. Settlements are not intended to be used by people that don't need to settle. If you can pay, you absolutely should. It's simply unethical otherwise.

That being said, there are some unethical people that could afford to pay off the debt but choose not to so they can save some money. The system is designed to prevent those people from doing it again (at least in the near future) by reducing their credit score. So, you can try to settle if you really want to, but it'll hurt your credit for up to 7 years.

Regarding the legitimacy of debt settlement companies, they basically work by charging you to negotiate on your behalf. For example, if you owe $10K, the company may negotiate $5K with your bank and charge you $6500 to pay off the debt. The reason these companies are considered scams is that they oftentimes try to convince people to settle on debts that they don't need to settle. Also, note you can't usually negotiate a settlement with a bank until after you stop making payments for at least 3 months. The reason for this is the bank wants to see you take a hit to your credit score first so they know you're serious about actually needing to settle.

Conclusion: don't ever settle your debts if you don't have to.

  • 1
    There is also the "tell you they've negotiated $6500 with the bank, but then they just take your money and run off with it" scam. Or the "We need $100 as a deposit before we can finalize the deal, oh wait, the negotiations fell through, no you don't get your $100 back" scam. May 4, 2019 at 13:39
  • @TTT - that is valuable. To be clear my goal is not to unscrupulously avoid paying. Where we landed in such a debt has been due to a series of events (medical emergencies, student loans, etc). We still have a lot of debt and I have been thinking to continue on the strategy of balance transfers. When companies call, they do sound like we are overpaying. When you look at penalty fees and interest rates, it definitely makes you think. All said, it does make sense that your credit score goes down and so it really is not worth it. To be sure this is even if I call the actual bank to settle, right? May 4, 2019 at 21:49
  • @perennial_noob: "When you look at penalty fees and interest rates" -- but didn't you just say you're not being charged interes and are paying back by the rules so you're not being charged penalty fees either? May 4, 2019 at 22:34
  • @HenningMakholm - I am referring to fees that I have paid over years. Generally, in the US the fees are very steep. For ex, for maintaining a positive balance, for missing payment by a day, etc. It sounds anarchist but banks here do charge unscrupulous amounts and these affect the poor and lower middle class more than anyone else. That will be a different topic and so it is pointless to talk about that here, May 4, 2019 at 22:46
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    @perennial_noob - you probably won't be able to settle unless you stop paying for a few months- which will certainly hurt your credit too! But once you do that, between settling directly with the bank vs using a third party, assuming you could negotiate a better deal than the third party + their fee, yes, you would be better off working directly with the bank.
    – TTT
    May 6, 2019 at 22:24

There is a very common scam, "Rachel from Card Member Services" a robo call that seems impossible to stop.

To mhoran's point, if the card issuer is calling you to settle, that's a different story.

My SIL got into trouble some time ago. Unable to refinance a mortgage down to 4%, from 7%, due to an outstanding, very overdue card. She was in discussion and was looking at paying $456/mo for 4 years to pay off the $14K debt. And was planning this in her budget. I told her to offer the bank $10K, lump sum. They accepted. But again, only talk directly to the card issuer.

  • This is interesting. I added some more context in my question. I am wondering if I should similarly call the credit card company and try to negotiate. But then I also wonder if my credit score may take an impact. May 3, 2019 at 23:06

Only talk directly to the credit card company. Third Parties usually are a bad idea at best and a scam at worst. If you call the Clark Howard hotline I am sure they will concur with what I am saying.

Be ready for your credit to take a hit if you do pay a percentage on the dollar.

  • 6
    I agree with most of this, but who is Clark Howard and why is that the appropriate person/organization to call?
    – yoozer8
    Apr 22, 2019 at 13:22
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    The OP is literally asking for clarification about which sources are to be trusted for this sort of offer. Probably best not to start name-dropping random hotlines without so much as a link to their homepage or an explanation of why said hotline is to be trusted.
    – Steve-O
    Apr 23, 2019 at 13:24
  • @Steve-O, yes and also if I should be considering such an option. I added more context to my question and I hope that helps too. May 3, 2019 at 23:03

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