What is the difference between “resizing” your account and negotiating your rate?
Resizing your Credit Card account is the act of closing the Credit Card, allowing you to make timely payments on the past due balance. The major downside of a re-size is that you will be denied access to the account until the balance is paid in full.
Furthermore, the Credit Card Companies often report re-sized accounts to the Big Three Credit Bureaus, Equifax, Experian and Trans Union.
Once other Creditors see that you are having financial trouble with any credit account, any other variable rates on loans will be vulnerable to dramatic interest rate rises. This means you will be vulnerable to excessive and abusive Credit Card Rates in the future. Resizing an account can actually do much more harm than good.
Negotiating your rate is a different matter.
Negotiating your own credit card debt means working directly with your sometimes not so friendly Credit Card Customer Service Representative.
The benefits of negotiation beat resizing hands down. Negotiation is a well respected practice of savvy consumers. When you negotiate your Credit Card Debt, the transaction is not reported to the Big Three Credit Bureaus. This means that negotiating your own Credit Card Debt will not affect your credit score.
Negotiation can actually improve your Credit Score.
Think about it? The bigger your available balance is the more credit worthy you appears to your Creditors. Plus, you can still use your Credit Card once you negotiate the past-due balance.
To review, if you want to close your Credit Card Account and hurt your Credit Score you can ‘settle’ the account for yourself. On the other hand, if you want to lower your Credit Card Debt without hurting your Credit Score, you can ‘negotiate’ the account.