According to the Experian Consumer Credit Review, Americans had an average credit card balance of $6,194 in 2019. And while carrying some debt is normal, high levels of debt can be overwhelming and difficult to manage — especially if you are carrying multiple balances on high-interest credit cards.
That’s where credit card debt relief comes in. Read on for more information on how to get rid of credit card debt.
What is Credit Card Debt Relief?
Debt relief companies can help you pay off debt, either by reducing the amount you owe or by making your payments more manageable. Some common credit card debt relief options include balance transfers, debt consolidation loans, and debt management plans.
Here’s how each of these can help you get out of debt:
Balance Transfers
Many credit card companies offer balance transfer options with a lower APR for a few months or a year. Transferring your credit card debt to a card with a lower interest rate can enable you to save hundreds or even thousands of dollars in interest over time.
That being said, you’ll need to be approved for a new credit card to take advantage of this option, which will require having a decent credit score. What’s more, most balance transfer cards require you to pay a balance transfer fee of around 3% of the transferred amount, and once the promotional interest rate expires, you’ll start accruing interest at the regular rate again.
Debt Consolidation Loans
Debt consolidation means combining various types of debt into one loan with a single payment. This solution makes it easier to manage your debts, since you’ll only have to worry about one payment each month.
However, you’ll need to be approved for a loan and you’ll need to have good credit to qualify for a low interest rate. In addition, if you have a high level of debt, you may not be able to qualify for a loan large enough to cover all of your debts.
Credit Counseling
Working with a credit counseling agency can be a good way to create a repayment plan that fits your budget. Credit counseling agencies typically negotiate with your creditors on your behalf to lower your interest rates and waive late fees, which can help you pay off your debt more quickly.
The problem with credit counseling companies is that it can take a while for the process to provide you with real debt relief. You’ll need to make monthly payments to the credit counseling agency, which will then pay your creditors. This process will negatively impact your credit score, since it requires closing all of your accounts.
Finding the Right Debt Relief Option for You
It’s important to be cautious when considering debt relief options, because there are many scams out there. Be wary of companies that charge upfront fees, or promise to erase all of your debt.. It’s always a good idea to do your research and read reviews before working with any company.
If you’re motivated to finally get out of credit card debt, the first thing you should do is make a list of all your debts and plug them into a debt repayment calculator. Then, figure out how much money you can afford to put towards debt every month. This will allow you to see how long it would take you to become debt free.
If you’re struggling with credit card debt, the best thing you can do is make a budget, and do everything you can to pay off your debts as quickly as possible. You can also try to increase your income by taking on a side hustle and reducing your expenses to free up more money to put towards your debt. You can also consider speaking with a financial advisor or credit counselor to get personalized advice on how to get rid of credit card debt.