NEW YORK, June 16 (UPI) -- The American Bankers Association said that settlements on credit card debt are rising, a sign expectations of full payment on U.S. accounts are dwindling.
Banks are reluctant to admit they are settling for less than the full balance owed, or that they are allowing front-line employees to negotiate settlement offers with customers, The New York Times reported Tuesday.
From the banks' point of view, it would be bad for business if word got around that consumers can run up credit card bills and negotiate quick settlements.
Bank of America and American Express said they decide on each case, one at a time, before agreeing to a settlement.
As defaults rise, however, "now it's the card company calling you and saying, 'Let's talk turkey,'" said David Robertson, publisher of the Nilson Report, a trade journal.
Nationally, revolving credit card debt hit $939.6 billion in March. But accounts with no payments made for at least 30 days reached 6.5 percent in the first quarter.
With unemployment at 9.4 percent, banks are more willing to negotiate settlement terms as the market for delinquent accounts has also dropped.
Collection agencies in the past paid about 15 cents on the dollar for delinquent debt. The current price is about 5 cents on the dollar, the Times said.
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