Pay the due balance!
If the credit card company has filed suit, immediately file an answer to the complaint. Then call the company or its attorney and offer a settlement. If by some means you are able to come up with a substantial portion of the amount due, usually about 75%, say by borrowing from a relative or friend, the company would go for it rather than getting a judgment and collecting a few dollars a month from a garnishment of wages. The company will write of the remaining portion of the debt and get a tax deduction, therefore even though it "loses" 25% on the debt itself, it will get some of that back as a tax deduction.
Credit card companies are motivated to take less because it's more of a problem to collect small amounts of money on a monthly basis rather than one large amount in a one time payment.
Generally speaking credit card companies make money in several ways. One way is to charge the consumer a yearly fee to use the card. They also make money by charging unpaid balances interest. And, their interest rates are well above the interest rates thet themselves pay to banks, for example. A large credit card company can in current times pay a rate of interest well under 7%, well under. On the other hand, they charge their customers rates anywhere from 12% to 17% or higher. They are not permitted to charge over 23.9% on cash balances. Discover Card, for example charges 23.9% on cash balances. In addition to this robbery, they charge merchants who accept credit payments for merchandise they sell a 5% fee.
Annual percentage rate: The amount of interest paid on unpaid balances;Grace period: Number of days to run a balance before fees or interest are charged;Secured card: A credit card with money in a savings account to act as collateral;Credit report: A listing of a person's financial information and history.
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