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Banks paying you to pay off credit card debt?

Print Posted by Cheryl Costa September 22, 2008 08:49 AM

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These days, if you miss even one payment on your credit card, you could be receiving a call from your bank instead of a letter. That is because more and more people are now defaulting on their credit card debt. A recent article in the Wall Street Journal stated that 4.5 percent of bank credit card accounts are now delinquent.

Banks are so anxious to see balances paid down that some are offering payment incentives. Citibank has been contacting some of its credit card holders and offering to match a percentage of the payments made over the minimum amount due if the cardholder agrees to pay off a percentage of their balances quickly. There is a cap on the match ($550) and the cardholder usually has to agree to at least temporarily stop using their card.

Another bank has realized that cardholders are using caller ID and answering machines to avoid collection calls so they are mailing phone and gift cards to late payers to get them to call back. The trick is that the gift cards are not activated until the account holder contacts the lender.

The point is that if you are struggling with credit card debt, you should contact the bank as soon as you can. Companies are definitely trying harder to work deals that will work for you. Some will offer temporarily lower payments until you catch up on your debt. At the end of the day, the credit card companies want the debt paid off just as quickly as you do.

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Local finance professionals share insights and advice on issues such as budgeting, managing debt, and retirement planning.

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About the contributors

Andrew Chan is the founder of Integrative Financial Advisors in Framingham. He provides comprehensive financial planning advice and investment management services. He has been an adviser for over 12 years and works with clients to integrate all aspects of their finances including investments, retirement, education funding, and tax planning.

Cheryl Costa is a managing director at AFW Wealth Advisors, which has offices in Natick and Purchase, N.Y. She advises clients on investing, education funding, and estate planning. She holds a master’s in business administration from Boston University.

Jamie Downey has been an accountant for more than 14 years. He's a partner at Downey & Co. in Braintree. Prior to joining the firm, he served as a manager in the audit department of accounting firm KPMG.