Four Credit Card Relief Programs That Could Help
If you’re struggling with high credit card debt, you’re not alone. Lots of folks get in over their heads with plastic. But don’t panic – there are options that could give you some relief.
Here are 4 credit card debt relief programs that could help lighten the load:
-1. Balance Transfers
Balance transfers let you move your existing credit card balances onto a new card, ideally one with a 0% intro APR for a set period of time (usually 12-21 months). During the intro period, all your payments go toward the principal instead of interest. This can help you pay down debt faster.
To qualify for a balance transfer card, you’ll need decent credit – aim for a score of 670 or higher. And watch out for balance transfer fees, which usually run 3-5% of the amount transferred. But if you can pay off a chunk of debt during the intro period, the fee may be worth it.
Downsides are that the 0% APR is temporary, and it doesn’t apply to new purchases. So you’ve gotta be disciplined about not running up more debt on the card after transferring a balance. Read the fine print carefully.
Some popular balance transfer cards include:
-- Citi® Diamond Preferred® Card – 0% for 21 months with a 3% fee
- Chase Slate – 0% for 15 months with a 3% fee
- BankAmericard® Credit Card – 0% for 18 months with a 3% fee
Ask your credit card company if they offer any balance transfer deals. And shop around online to compare options.
2. Credit Counseling
Non-profit credit counseling agencies can help you manage debt through services like:
- Budgeting and money management tips
- Advice on prioritizing which debts to pay off first
- Negotiating lower interest rates and waived fees with creditors
- Setting up a Debt Management Plan (DMP)
With a DMP, the agency works out a payment plan to pay down your debt in 3-5 years. They distribute one monthly payment from you to your creditors. Creditors often agree to lower interest rates and waive certain fees, but it’s not guaranteed.
A few well-known, accredited non-profits to check out include:
- Money Management International
- GreenPath Financial Wellness
- National Foundation for Credit Counseling
Most credit counseling services charge small monthly fees. But they offer free initial consultations.
-3. Debt Settlement
Debt settlement companies negotiate with your creditors to settle accounts for less than you owe. This involves some risks, like:
- There’s no guarantee creditors will accept a settlement offer.
- You may get calls from debt collectors while in a program.
- Settling debt for less than owed may result in taxable income.
And debt settlement often requires letting accounts become delinquent or defaulted before creditors will negotiate – which can trash your credit scores.
Still, settlement could be an option if you have high-interest debt and can’t keep up with minimum payments. Just be sure to choose an accredited, reputable company like:
-And know that most debt settlement companies charge hefty fees based on a percentage of enrolled debt. So it’s important to weigh costs vs potential savings.
4. Debt Consolidation Loans
With a debt consolidation loan, you take out a new loan and use the funds to pay off existing debts. This combines multiple payments into one fixed monthly payment. Ideally at a lower interest rate, to help you save on interest charges.
Banks, credit unions, and online lenders offer debt consolidation loans. Rates and terms vary based on your credit score and history. To qualify, you’ll generally need a credit score of at least 660.
A few things to keep in mind:
- Watch out for origination fees.
- Your credit mix could worsen at first when accounts close.
- Missed payments on the new loan could have serious consequences.
- You’ll need the discipline not to rack up more high-interest debt after consolidating.
While not ideal for everyone, consolidation loans can streamline payments and potentially lower interest costs. Evaluate your options carefully.
Other relief programs to look into:
- Asking creditors for lower rates or waived fees
- Non-profit credit counseling
- Debt management plans
- Borrower’s assistance from mortgage lenders
- Student loan consolidation
- Military debt relief benefits
If you’re overwhelmed by credit card debt, know there are solutions. Seek help from reputable sources. Create a budget, cut expenses, and pay down balances ASAP. You’ve got this!