You should now be prepared to settle debt on your own, but with what expectations? How much should you expect to save, percentage-wise on your settlement and how will your bank respond? These are great questions, and the reason I included this information in the debt settlement guide. You need to have a goal, and it will depend a lot of your bank.
There are many sources for rating credit cards using points, rewards, and fees as the main criteria. What follows is a debt settlement version of “rank a bank” where I apply my experiences; feedback from people settling credit card bills on their own; trends for each bank that apply today; and each banks past offers for settling debt, as a ranking tool.
Most people reading this will care more about what type of settlement they can get today, but I have included some reviews of past behavior in order to better organize the list. If you need to settle debt with your credit card lender, predictability and flexibility are 2 major considerations for how the below list is ordered.
You need to know that results from settling your credit card debt is situational. There are account level elements that will prevent you from getting the best deals. There are also personal life circumstances that can make a huge positive impact on your settlement savings with some of your credit cards.
Update: When I wrote this a few years back, most banks were coming off of record high credit card default rates. In some cases, their defaults more than tripled. We are now near record low default rates for cards. This has created more of a tightening of collections policies and settlement terms and pricing. Your ability to get the best outcome from negotiating the balances on your cards is more nuanced today, and will remain so moving forward, as a result of pending regulatory changes. If you want to talk about your list of creditors, and get an understanding of what you can achieve through settling, call me at 800-939-8357, ext 2, or click “request consult” at the top of this page, in the menu.
Also, when I first published this review, I only focused on reviewing the 7 largest credit card issuers for how they were with settling before your credit cards reach charge off (typically 6 to 7 months late). I have now added the ranking factor for settling after charge off. This means you are typically more than 7 months late, are usually dealing with outside collection agencies, but the bank did not sell your account off to a debt buyer. I will be ranking larger debt buyers in a coming post.
1. Settling Your Chase Credit Cards
This may surprise many readers due to how much Chase gets hammered in the press and media for a host of issues recently. The state of California has sued Chase for past collection practices. There was the 2015 announcement regarding penalties against Chase at a federal level for some of the same practices the California Attorney General sued for.
Chase stopped directly suing their card members as a method for credit card collections in 2011, and stopped selling their unpaid credit cards into the debt buying market in 2013. Most of those challenges happened around Chase policies and procedures for accounts that charge off.
Predictability: Chase has been settling pre-charge-off credit cards with their card members for between 20% and 40% for years. While there are instances where settlements are higher, they are for predictable reasons.
Flexibility: Chase offers settlement with 94 days to pay (split the payments up) before charge off. Payment flexibility when settling Chase debts after charge off can go longer than 3 months (be careful when opting for longer payments as it may impact the amount you save).
After Charge off: The approach for settling Chase accounts, when you have more than one credit card bank to settle debt with, will often be letting it go longer than 6 or 7 months past due. Settlements with outside collections agencies, when done correctly, are often better, and by a good margin. In other words, it literally pays to wait.
History: Even while suing more card members a few years ago, Chase customers were consistently able to get 35% to 40% settlements pre-charge-off, and even with post-charge-off accounts sent to Chase legal (sometimes even after a lawsuit had been filed).
Update: Chase, like many other credit card issuers, has tightened up collections. Done correctly, the margin of savings you can get from settling with Chase is often 25 to 40%. But the path to that good of a deal with Chase will often now require some skill, and it also means dealing with outside collection agencies to get a better outcome. Chase is still awesome at causing their customers the least stress in the pre-charge-off collection process. But dealing with third-party collection agencies is a moving target. I suggest you get coached up, or get help, when you have multiple accounts to deal with.
If you are on a fixed income, with no assets, and no ability to keep current with payments, Chase has been known to forgive or cancel your debt. I started noticing this from Chase in 2015, and it continues into today. I am not aware of another bank doing this, but that could change in the near future.
2. Bank of America Debt Settlements
Anyone who knows the debt relief market well enough to put together their own debt relief ranking list could argue Bank of America should be at the top. Bank of America, like Chase, is no stranger to negative press, and for some of the very same issues. But here again, sticking with predictability and flexibility, Bank of America wins second place when it comes to settling your credit card debt before charge-off.
Predictability: Bank of America currently settles credit card debts for between 25% and 40% before sending your accounts out to debt collectors and debt buyers after charge-off.
Flexibility: Offers the 94 day settlement payment terms prior to charge off. Settlements with longer payment terms after charge off are an option, but are situational, and often must be done with an outside debt collection agency.
After Charge off: With BofA, if you have many different credit cards to settle, I will sometimes want to let them go longer than 6 or 7 months past due. This will typically mean you are going to be settling with third party debt collectors, but like Chase, this is done to get a much improved settlement outcome, or to settle a higher priority issue. I should also point out that FIA Card Services, which is part of BofA, may warehouse unpaid debts after too long. And where some debts can be settled for better savings the longer they remain unpaid, that’s not always the case with BofA.
History: Had I been publishing this in 2008 and 2009, Bank of America would be at the top of this list. At the height of the recent recession, BofA settled credit card debts consistently for as low as 15% of the balance owed. Prior to the recession, BofA remained fair and consistent with settlement offers you could negotiate with them and were not overly reliant on filing lawsuits to collect from you.
Update: Because BofA is enjoying very low default rates, like many of the credit card banks, they have tightened up on settlements, and even changed some protocols. Depending on the rest of the credit cards you may need to settle debt with, I would not necessarily place Bank of America ahead of another card for your available settlement dollar, where they were often my first target to settle with. You may want to call in for a consult if you have a BofA card along with other ones.
Update 3/2018: Bank of America is suing more and more. But not enough for me to take them out of 2nd place.
3. Capital One for Most Improved
The offers to settle credit cards with Capital One have been on again off again. That is only part of why I ranked them 6th when I originally published this article.
Predictability: Capital one settlement percentages before they charge off your account are currently between 30 and 50%, sometimes a bit higher, and rarely lower. But the kicker is that settling with Capital One is far more common on the other side of charge off, and when they have the account in their recovery department.
Flexibility: You will sometimes have better opportunities to settle over several payments with Capital One, but there are instances where a single lump sum is all that is on the table, or where the lump sum could get you the better outcome. Stay tuned on Capital One, or call in to talk strategy. There has been some pretty cool things going on in 2016, and they even appear to be suing less.
History: Capital One is the most prone to sue for collections than any other credit card issuer on or off of this list. Recent reports by investigative journalists show that Capital One sues more in Hennepin County MN, and Cook County IL, than anyone else, and by a large margin. That theme is carried out in many large counties across America.
Special note: Capital One fills a void for people starting off with building credit, and they offer good products to those who need to rebuild. Also, last I knew, they offered the best discretionary income calculation to qualify their accounts into a reduced monthly payment with a nonprofit credit counseling agency. If they could rework their recovery policies, and their compunction to sue, they would be closer to the top of this list.
Active page to discuss settling with Capital One.
Update: Capital One is still heavy with using the courts to collect (even though I mentioned seeing less of this right now). They are a situational credit card bank. They rely heavily on analytic decisions. I recommend getting help if you want to get the better deals, or to avoid their aggressive collection tendencies. More so when you are juggling Capital One with other credit cards.
Update 3/2018: Capital One is now selling debt again after taking a break from the practice for many years.
4. Discover Card Settlement Policies are Unique
Some readers could legitimately make a case for Discover being at or near the bottom of this list. But if you are looking for debt relief versatility and flexibility among major credit card issuers, Discover Cards delivers. Just in some unusual ways.
Predictability: Discover trends today are settling credit cards (on accounts that qualify) for between 30% and 50%. Discover tends to not offer the 94 days to pay on settlements, preferring to get a single payment when settling before they charge off the account and place it for collections. But Discover is one of few creditors to offer a 60/60 plan to some of their card holders. This is where they offer to reduce the debt to 60% of the balance and spread the payments on that amount over 60 months. Discover is not selling to debt buyers right now. And they are one of the more aggressive creditors to place accounts with attorneys for collection after charge off.
Update 3/2018: The last several people I have spoken with that have asked Discover about the 60/60 plan have been told it is no longer an option.
Flexibility: Discover provides a different type of flexibility like mentioned above. Where Discover may not offer the 3 month payment terms; the 60/60 plan; as well as some of the strategic ways I have helped people navigate a Discover settlement when juggling other accounts; combined with a good reduction on their balances; places them above the remaining banks for this category.
After Charge off: Discover options after charge off are similar to prior, but with some payment options that they will not extend before this. Not everyone will have the luxury of settling with Discover quickly, but I recommend it if you can, and if it makes sense given the rest of the accounts you may have to work through. This is mainly due to attorney collection placement.
History: Discover has been fairly predictable with settlements for the past decade. They do tend to get stubborn with settling, and the amounts they will settle for, when your accounts are very new, or when you have recent balance transfers or cash advances. They have long had the reputation for placing more accounts with attorney debt collectors after charge off, than other creditors.
Update: There is not much to say in order to bring Discover into recent focus. They are just “Steady Eddy” with their policies and procedures.
5. Citibank Settlements are Improving
When it comes to settling with their card holders, it can be hard to pin Citibank down for predictability, which is such a huge element for developing a successful debt settlement plan. This fact, combined with the other things I will lay out, puts them further down this rank a bank review.
Predictability: Depending on the account, targeting 40% for settling your Citicard is the most realistic expectation to set. Citibank also services other credit cards like Sears, Lowes, Home Depot, gas cards and more. These branded cards can at times be settled for 40%, but often after they are placed for outside collections. When I put a debt settlement plan together that contains 3 accounts, one with BofA, one with Chase, and one a Citicard, I often target settling the Citibank card with a collection agency after charge off (if you had only enough cash resources to settle 2 accounts before charge off).
Flexibility: Offers to settle with the 94 day payment terms like other banks. Citibank offers longer payment terms on settlements after your balance charged off.
After Charge off: Citibank settlements with collection agencies after charge off can turn out better in a lot of situations. And because they service so many branded cards, including their new deal with Costco, many readers will find you have to settle Citibank accounts after charge off. But I repeat… this is often a good thing.
History: Over the last 20 years, I have watched Citibank go from being the most likely to sue; to accepting settlements at just past 90 days late; to offering great temporary hardship plans; to offering none; to settling at 60% as a floor; and even not offering any settlement at all. They now tend to sue for collection a great deal less than in years past, and due to the current collection environment, I don’t expect them to get more aggressive again soon. I do wish they would quit selling their debts to Unifund (a debt buyer), but I will save that commentary for the upcoming rank-a-debt-buyer post.
Active page to discuss settling with Citibank or listen to my video about credit card debt and Citi on our DebtBytes channel.
Update: Thank heavens I have not noticed new debts sold by Citibank to Unifund! When I see those accounts anymore, they are the older ones that were sold years ago. I am going to be tempted to move Citibank up this list soon if they continue with today’s collection trends. Citibank does sell debt, and it would be great if you can prevent that from happening, but if Midland Funding continues to be the buyer, you will have far better options than if they sold to other debt collectors. Call me if you have Citi accounts and lets talk strategy.
6. American Express is Tough About Settling
AMEX lands near the bottom of this review for a couple of key reasons. Not the least of which is that you will rarely settle with American Express directly. AMEX never bothered to invest in the infrastructure for internal collections and recovery.
Predictability: Settling American Express accounts can be all over the map. The vast majority get settled with outside collection agencies and attorney debt collectors. The target amounts can range between 30% and 60% depending on who the account gets placed with, and how long the account has gone unpaid. There are instances where settlement is simply not on the table.
Flexibility: There are cases where settlements can be paid over 6 or even 12 months (after charge off). It will depend on who is collecting for AMEX. There are situations where the best savings offers for settling will be when agreements are paid in a single lump sum.
After Charge off: Settling American Express debt for optimal savings can require your account to be charged off. It sucks, but the predictability of collection aggression by AMEX, and the collectors they use, can actually be used to your advantage. Get help with these accounts.
History: American Express is a bit of an anomaly compared to all other credit card issuers in the US. They have not sold charged off credit cards into the bad debt market. They maintain a black list of their account holders who default, making it more of a mistake if you ever get another Amex credit card product again. Their practices with business cards are odd too.
Active page to discuss? There really isn’t a dedicated page for settling with American Express. Settlements with AMEX are typically done with a collection company. Here is a post about settling with debt collectors for AMEX, and one for negotiating with Zwicker and Associates (large attorney debt collection firm that does a ton of file work for AMEX in many different states).
Update: Settling with American Express is now better done when you have a specific skill set. Call me at 800-939-8357 ext 2, or fill out the consult request form linked at the top of bottom of this page. I can coach you up, or connect you with the negotiator here that you need.
7. Wells Fargo Settlements Have Deteriorated
Wells Fargo could sure look to their peers for an example of customer service. Settling with Wells Fargo has taken a turn for the worse. I hope it is temporary.
Predictability: I have long estimated settlement percentages for Wells Fargo credit cards at between 30 and 40% of the balance owed. I still do. But settling with Wells Fargo is currently going to be a realistic target AFTER you are 6 or 7 months delinquent.
Flexibility: Wells Fargo has not always offered the 94 day terms. There have been instances where the better savings percentage has come from lump sum single payments. The ability to pay using terms is just not advisable with Wells Fargo right now.
After Charge off: I target post charge off settlements with Wells Fargo. Pre charge off settlements are contentious. Some of that can carry over into negotiations later too, but you will often get less of a hassle.
History: Wells Fargo was once one of, if not the, most stable credit card banks over the last 10 years when it came to settling. The American Bankers Association ran a story recently about how Wells Fargo started tapering off selling charged off accounts to debt buyers, and has now ceased all sales to debt buyers. This change won’t likely last long.
Update: Wells Fargo went from 3rd to last with this update. They are really hard to work with to get a decent settlement. They have somehow managed to hire some of the rudest debt collectors of late, or created a culture where it is okay for their employees to embody the bad reputation the collections industry is working so hard to get away from. They will blatantly lie, and it does not matter which team or collection floor you talk with.
I now encourage people to get full service help on Wells Fargo accounts, and from the attorneys negotiating here when possible. It is just that bad. If you need help with Wells Fargo settlements fill out the consult request form linked at the end of this article.
How well do other banks settle debt?
The above lenders combine to control more than 60% of the credit card market in the US. There are pages on this site with ongoing feedback and discussion about settling with many of the credit card lenders you do not see listed here. Use the search box to find more information about them. If there is no page on this site about your creditor, or a debt collector you are dealing with, you can start one by using the Ask Michael feature.
The above is provided for general information. You can use the predictability for what each creditor may settle for as a base line in your planning. There are reasons why banks settle debt for higher and lower rates. Much of that can depend on your individual set of circumstances. I will update this review with new information as trends change, which is inevitable.
You might think your journey through debt settlement has come to a close, but there are two more steps to officially finish the deal – getting it in writing and making your payment(s).
Next, we’re going to discuss why getting your agreement letters in writing matters and how to go about it.
If you are dealing with an attorney collecting for any of the above banks, and want affordable legal help to handle the court process while working toward settlement, or if you simply are not the DIY type, fill out a profile on this site and get affordable settlement help. It’s as easy as clicking the “get started” tab under the consult request image below.
This Debt Settlement Guide includes:
An Expert Guide to Credit Card Debt Settlement
How and Why Banks Settle Credit Card Debt with You
Types of Accounts to Include in Your Debt Settlement Plan
Why Settling Credit Card Debt is Like a Race
How to Settle Credit Card Debt Quickly
How to Talk to a Debt Collector
How to Negotiate Credit Card Debt Successfully Yourself
7 Largest Credit Card Banks and How They Settle Debt (you are here)
Get Debt Settlement Letters and Agreements from Collectors
Paying Debt Collectors After You Negotiated a Settlement