As inflation remains high, more Americans than ever before are relying on credit cards to get by. Even when income recovers, it can be challenging to pay off the balances because of the high interest rates. This is where credit card debt relief can help you regain stability and become debt-free.

The average American had a credit card balance of $6,088 in Q3 2023. With average interest rates at 22.77%, it can be difficult to pay down those balances. 

If you're facing financial hardship, there are a number of debt relief options available through nonprofit and for-profit companies to manage your credit card debt.

What Is Credit Card Debt Relief?

Credit card debt relief is any strategy that lowers your debt burden and makes repayment easier. When you are dealing with crushing credit card debt, anything that can help you manage the debt can be a relief. 

Your personalized credit card debt relief plan can be one or a combination of the strategies below: 

  • Restructure your credit card balance amounts
  • Combine multiple credit cards into a single, more manageable payment
  • Negotiate with your credit card issuer to lower the amount of your debt
  • Pay off your principal faster
  • Find a low-interest credit card or loan to pay off high-interest debt

5 Proven Credit Card Debt Relief Programs 

Regardless of your circumstances, there are several tried-and-true debt relief options designed specifically to help you manage your credit card debt.

1. Credit Card Balance Transfer

Balance transfer allows you to transfer balances from all your credit cards to a new card to minimize your interest charges. This means you may be able to lower your monthly payments, save money, and pay off your debt faster.

Signing up for a 0% APR balance transfer credit card is an ideal solution if you have good credit. If you have an excellent credit score, you may qualify for the longest 0% APR introductory period. 

Many cards have promotions that run for up to 24 months, so you will have more time to pay off your credit card debt interest-free. This is how it works:

  • Open a balance transfer credit card. Your credit score will determine your credit limit and the terms and rates you qualify for.
  • Transfer balances from all your existing credit cards to your new account. Transfer fees will be added.
  • Pay off your debt without interest charges in the specified number of months.

If you want to enjoy the most cost savings, it is important to ensure you eliminate your entire balance during the term so you do not incur any interest charges.  

2. Low-Interest Debt Consolidation Loan

Another option is to consolidate your credit card debt with a personal loan that offers a lower interest rate compared to your credit cards.

Like balance transfer, this option is only suitable for those who have good or excellent credit scores. Higher credit scores will allow you to qualify for lower interest rates. Aim to find any loan offering APR below 10% to get the relief you need.

Here is how it works:

  • Compare the rates offered by different financial institutions to find one that is the most cost-effective.
  • Apply for the loan and wait for the approval.
  • Once the loan is approved, you can use the funds to pay off your total debt.
  • Make regular payments towards your personal loan.

When using a debt consolidation loan, it is important to choose one that offers a shorter term to keep your total repayment costs lower.

3. Credit Card Debt Settlement

If your credit score is not ideal, or you need more monthly financial relief, debt settlement may be a good option for you. A debt relief company can negotiate with your credit card issuer to settle your debt for a lower lump sum amount.

Debt settlement can help you successfully reduce your debt so you can avoid dire situations like bankruptcy. Many debt relief companies may also be able to negotiate for lower interest rates, lower penalties, lower fees, fixed payment schedules, or lower minimum payments. You may also be able to save up to 50% of your original debt before fees, which can make a significant impact on your financial well-being.

4. Credit Card Debt Management Program

If you feel you are not making any progress in paying off your unsecured debt, it may be time for professional help. In many cases, credit card issuers may be hesitant to work with you if you have missed payments or do not have good credit.

Working with a professional credit counselor means there will be someone advocating for you. They can review all your options and help you choose a program that is right for your financial situation.

Once it is determined that a debt management program is suitable, your counselor will craft a repayment plan and a monthly payment structure that is sustainable for your budget. They will also negotiate with creditors to eliminate or reduce fees, interest charges, and penalties.  

5. Bankruptcy

Bankruptcy will have a severe impact on your credit, and this will last for several years. It’s important to explore all the options available to you before you consider bankruptcy.

Depending on your circumstances, you can file for Chapter 7 or Chapter 13. It is also important to understand that bankruptcy is a legal process that will carry an additional cost in the form of attorney fees. 

Bankruptcy doesn’t discharge all your debt. Ultimately, this decision will be made by the court. 

When To Look For Credit Card Debt Relief

A good time to look for credit card relief is when you are behind on your credit card bills, find your debt overwhelming, or are struggling to make payments to your lender on time. 56% of all active credit cards have outstanding balances in America, and 2.98% of accounts are delinquent.

It’s best to take action and pay down your credit card balances before the situation goes out of hand. Other than creating a plan to pay off your debt, you can also work with a professional to address the spending habits that keep you in debt.

Teresa Dodson, a debt expert and the founder of Greenbacks Consulting, offers the following advice: “There is a difference between restructuring your debt and needing debt relief,” Dodson shares. “If you simply need to restructure your debts, zero-interest balance transfers can save you a ton of money. But if you're buried in debt and need a reduction, debt relief options are what's needed,” Dodson explains. 

How Is Your Credit Score Affected by Credit Card Debt Relief?

Debt relief options will impact your credit scores differently depending on a number of factors, such as the option you choose and what your current credit scores are.

  • Options like credit counseling and debt management plans will have no or minimal impact on your credit scores. 
  • Credit card debt settlement can lower your credit score. This option is usually used when you are already maxed out on your credit cards or are feeling stuck making your minimum payments. Your credit scores may already be low, usually around 650, meaning you are generally unlendable and not creditworthy. 

You can request a free credit report to keep track of your current score. It is always possible to turn over a new leaf, regardless of your current circumstances. 

Choose the Best  Credit Card Debt Relief Company 

There are many debt relief companies out there today that can help you, so it’s important to take a look at their online reviews and accreditations and ensure that they can deliver on their promises. 

Look into the reviews of the company and see if any complaints have been registered against it before you decide to sign up for any program. We also recommend avoiding working with companies that:

  • Offer guarantees that your debt will disappear
  • Claim to settle all debts and will stop collection calls from credit card companies
  • Charge upfront fees even before they provide any services

If you are overwhelmed with credit card debt and not sure which option will provide you with the most relief, it is time to talk to a professional. A reputed debt relief agency can help you understand your options, find a debt resolution program that is suitable, and develop a payment plan to pay off your debt.