Millions of Americans struggle with credit card debt. This debt is the result of everything from job loss to medical bills, holidays to natural disasters. Experian estimates that the average balance on a consumer credit card is around $5,500.
While that may not seem like a considerable amount of debt, you have to also consider interest and what could happen if you can no longer afford those monthly payments. Interest and fees can add up quickly!
If you are one of the millions of people who have credit card debt, you likely want to know the best tactics for getting out from under the debt. We’ve all heard stories about credit card companies tacking on fees, turning accounts over to collections, or even filing debt lawsuits. For consumers, avoiding these situations is important. Unfortunately, many consumers don’t know where to start.
That’s why Daic Law believes it is important to provide consumers with as much helpful information as possible. Our debt defense lawyer is passionate about helping consumers as much as possible – before and after debt becomes an issue.
Getting Out from Under Credit Card Debt
Here are our tips for how you can stay ahead of the curve and get out from under credit debt:
Develop a Payment Plan
This is not the same thing as getting on a payment plan with a creditor. But rather, you should have a plan for your payments every month. Making on-time payments helps avoid late fees and interest rate increases. If you can, pay more than your minimum amount due to further decrease that principal balance.
Consolidation is a good option for some consumers because it makes it easier to manage payments. Often, you can consolidate multiple debts into a single monthly payment. Consolidated plans usually also have lower interest rates, which reduces your overall debt.
Negotiate with Creditors
If you are having a hard time making your credit card payments, contact your creditor to negotiate. You may be eligible for a lower monthly payment, split payments, a lower interest rate, or a forbearance program. Since the COVID-19 pandemic, many creditors are offering hardship assistance for people affected by job loss or medical bills.
If you have a particular credit card with a high interest rate, you could see a reduction in debt if you transfer the balance to a credit card with a lower interest rate. Sometimes you can transfer more than one account to a single account with lower interest, which can substantially reduce your overall debt and interest. Many times, the new accounts will also offer no payments and no interest for a period of time.
Get Third Party Help
If you are simply having trouble managing your debt and payments, you can get help from a third party, such as a debt management firm or credit counseling firm. These resources can help you manage your payments or consolidate your debt.
Another option is working with a debt defense lawyer who can help you negotiate a settlement with creditors. Lawyers are often able to negotiate settlements at much lower interest rates and/or much lower overall cost. Often, you can settle for a lower amount paid over time, or a considerably lower lump sum payment.
The Bottom Line
Credit card debt can seem like an insurmountable obstacle in your life. But there are ways that you can reduce your debt and keep your finances on track. The options listed above are all tried-and-true strategies for lowering your debt and interest. But these options may not be right for you.