Historically, financial downturns and economic crises, were almost always boom times for debt collectors, because how much they earn is generally based on the amount of money that they recover. This recession is completely different however, because of its severity, and what was previously almost inconceivable, is now taking place.

Credit card companies have finally realized that due to the depth and breadth of this recession, that a huge number of Americans are so hard-pressed, that they can't, and won't be able to pay their bills.

The consequences of this depressing realization mean that the number of troubled borrowers that are now getting payment extensions, has close to doubled in the last six months, and borrowers that are having major problems are frequently being offered hard to believe deals, that release them from 20 - 70% of their credit card indebtedness.

Over the years, credit card companies constantly augmented their profits by adding all kinds additional charges, such as late fees, pre-payment fees and over-the-limit fees, and they seemingly didn't realize that they'd eventually kill the geese that were laying the golden eggs.

Credit card companies recently announced that they expect to write off an unprecedented $395 billion of bad debts over the next five years, which compares with a total of about $275 billion in the last five years.

If, like a great many others you're buried under credit card debt then it's time to act, and the sooner the better, and here's how to do it.

Prepare a list of all your credit cards and include;

The account name, the phone number, how much you owe, the annual interest rate and the minimum monthly payment.

Now call each credit card company and do your best to negotiate a lower interest rate, bearing in mind that credit card companies will normally only offer loan modifications to people who meet certain criteria.

The majority of credit card companies will normally only do deals with people that have been delinquent for more than ninety days, and if you haven't been delinquent for that length of time, or at all, then tell them politely, but firmly that you have financial problems and are trying to avoid delinquency.

After each phone call, update your info with the new percentage rates that were agreed to, and then reorder your list of companies according to their interest rates, with the card with the lowest interest rate at the top.

Now call the FIRST credit card company, and ask if you can transfer the amount owed to the LAST company on your list to them, and if they agree then try to make sure that they'll still honor the new interest rate that they recently agreed to. If they refuse to negotiate, then move on to the second company on your list, and repeat the process until you've finally called every company, and gotten the best deals possible.

The next step in the process is to reorder your list again, but this time, put the company that's charging the highest interest at the TOP of your list.

The last, and very important step, is to pay every company on the list, EXCEPT the FIRST one, the minimum monthly payment.

You should pay the FIRST card on the list the maximum that you comfortably can, and when it's paid off you should close the account, delete it from the list, and then do the same thing with the next card that's at the top of the list.

If you persevere with this, you'll gradually see your list of credit cards getting smaller and smaller, and you'll have saved yourself a huge amount of interest at the same time.

Will Using The Above System Harm My Credit Rating?

The answer is sadly, "yes", and you might well undergo a drop in your credit score of between 70-100 points, and you may be affected for as many as seven years. The adverse effects being that it will be far more difficult and expensive to obtain new loans.

Knowing that your credit score will be adversely affected, means that you'll have to make a judgment call as to whether to use the above system or not, and your decision should be based on your present financial state, and your existing credit rating.

In the event that you decide to follow the advice and to save the money, you'll now know exactly how to do it.