Choosing the Best Form of Credit Card Relief

Estimated reading time: 3 mins

For many folks in the US, credit cards are invaluable resources, especially during hard financial times. It’s estimated that approximately 70 percent of all Americans have a credit card, with 14 percent of them having more than 10 cards simultaneously. 

Credit cards provide a rainy-day fund for emergencies and can lay the foundation if you’re looking to build your credit. However, credit card debt can become overwhelming pretty quickly. Falling significantly behind on your regular credit card payments and maxing out your card may worsen your financial troubles and make them last longer.

This is when choosing the best form of credit card debt relief can come into play.

Credit Counseling/Debt Management

Professional credit counseling organizations can help review your financial standing and develop a plan to overcome challenges. Essentially, the employees of such organizations provide advice surrounding money and debt management and budgeting and credit issues. Before choosing a credit counselor, check with your state attorney general’s office or the consumer protection agency to ensure that they’re reliable.

Working with a professional credit counseling company may benefit you in several ways. For starters, the company can liaise with your creditors in creating a debt management plan that may require you to make a monthly payment to the organization. The credit counselors, in turn, use the money to pay your creditors. 

Additionally, the counselors may negotiate with your creditor for reduced interest rates or waive your charges. The only downside may be that some credit counseling service providers may charge a fee or request you not to apply or use your credit during the duration of the debt management plan. 

Debt Negotiation/Settlement

Under this approach, you’ll conduct talks with your creditors in an effort to win concessions to your existing loan agreements. The chief aim of these concessions will be the waiving of fees and accumulated interest payments — as well as a portion of the principal balance — in exchange for a one-time payment in full of the agreed upon amount to consider the debt paid in full. 

You’ll find information at detailing how this works precisely. It’s a worthwhile consideration, as you can clear your debts in less time at a lower cost. However, there are some significant considerations to make, so it’s a good idea to read up on this option before putting it into play. 

Debt Consolidation

You can use a personal loan to consolidate and pay off your cumulative credit card debt. All you have to do is reach out to your local credit union or bank. With the debt consolidation loan in hand, you won’t have to make individual payments for each credit card. Instead, you’ll only have to pay for the loan. 

If you have an exceptional credit history, you may receive the loan at a lower interest rate than the one being fronted by your initial credit card company. Personal loans may also offer flexible repayment terms that you can select based on your budget. Additionally, some lenders may pay off the credit card debt directly to prevent you from being tempted to direct the funds elsewhere. 

However, the personal loans for credit card debt consolidation may not come easily. Firstly, you may need to satisfy the lender’s eligibility requirements to qualify for the loan. In that context, you may fail to qualify if you’ve had significant financial troubles in the recent past. 

Besides that, based on your financial background, you may qualify for a loan with interest rates similar to those of credit card issuers. Other lenders may request the mandatory payment of an origination fee, which can consume a significant chunk of your funds before you’ve even received them. 

These are three of the most common forms of debt relief out there. As you can see, some are more effective than others, depending upon your situation. This is why choosing the best form of credit card relief should always include an honest assessment of your financial circumstances.

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