Credit card companies have never been as understanding as your middle school librarian, you know… the one who offered amnesty on late payments at the end of every school year.  But with a record number of credit card defaults in May and new rules making it harder for banks to charge based on risk, the New York Times is reporting on a new trend of credit card companies settling delinquent accounts for substantially less than the amount owed.

For Edward McClelland, a writer in Chicago, deliverance finally arrived a few days ago. Mr. McClelland’s credit card company was calling yet again, wondering when it could expect the next installment on his delinquent account. He proposed paying half of his $5,486 balance and calling the matter even. It’s a deal, the account representative immediately said, not even bothering to check with a supervisor….

Only a few creditors are willing to confirm the practice. Bank of America and American Express say they decide on a case-by-case basis whether to accept less than the full balance. Other card companies refuse to discuss the subject, but their trade group, the American Bankers Association, acknowledges that settlements are becoming more common.

This practice is yet another factor that is going to cause responsible credit card users costs to increase. And if you are a borrower who is mired in debt and sees this as an opportunity to cut your expenses just by asking nicely, you should consider that such amnesty does not come without a cost.  Like declaring bankruptcy or going into foreclosure, a delinquency settlement like this could destroy your credit for years to come. That kind of red flag on your credit report will probably disqualify you from major loans like mortgages or auto financing.