How to Settle Credit Card Debt

Posted on November 1, 2021 in Debt

When it comes to how to settle credit card debt, your two main options are to hire a debt settlement company to negotiate a reduced lump sum payment on your behalf, or negotiate directly with your credit card company.

If you’re in debt, there’s a chance you want to get out of it as soon as possible. That’s because it can be hard to pay off your debts if you take a long time. Also, taking more time to pay off your debt will mean paying more because the debt will build up in interest.

Too many Americans struggle with credit card debt. The average American makes $61,937 a year, but they have to pay an average of $3,100 in credit card payments each year.

This means that most Americans are spending most of what they earn paying debts. If you’re struggling to pay off your credit card, read on. This post will help you find ways how to settle your credit card debt with ease.

Credit Card Debt Settlement

Debt settlement involves working with a credit card company to pay off your credit card balance. The credit card company agrees to settle your balance for less than what you owe. Usually, they may decide to reduce the debt by 50% to 60% depending on your negotiation skills and who helps you negotiate a settlement. For the most part, settling a debt with the creditor is usually an attempt to avoid bankruptcy.

The first thing that happens when trying to settle credit card debt is negotiations begin between you and your creditor. That means you will talk to a representative from the credit card company and try to agree on what is called a “settlement offer.” However, not all creditors are open to accepting such offers.

If you are looking into settling credit card debt, you may wonder how much money you will pay for the credit card debt. Several factors influence what your settlement might look like, and including:

  • Your credit score
  • The amount owed on your cards
  • How long the balances have been accruing interest
  • Which banks or lenders you’re working with

Who Qualifies for Credit Card Settlement?

Anyone with credit card debt can settle their account for less than what is owed. However, several factors come into play when determining if your settlement terms are acceptable and whether it is good for the creditor to accept the settlement. These factors for how to settle credit card debt, include:

  1. Individuals in serious financial trouble and behind on payments, including those who have had accounts sent to collections.
  2. Those with multiple credit cards and high balances on their existing credit card debt, such as $10,000, $40,000 in debt, or more
  3. The currently employed but struggling financially people due to a job loss in the past year.
  4. People who want to settle their credit card debt but can’t afford the minimum payment each month
  5. Those who have bad credit and can settle their debt with a company that doesn’t do credit checks
  6. People whose income is currently unstable or sporadic, such as those who are self-employed.

People looking to settle their account will need to contact the creditor directly and explain why they want to settle instead of paying off their balance in full within six months.

*Note: Credit counselors recommend that before paying off your credit card debt, make sure that you pay the minimum amount on time to avoid late payment fees.

Downsides of Credit Card Debt Settlement

Although debt settlement has several advantages, there are a few drawbacks to consider. The main downsides on how to settle credit card debt include:

1. It can damage your credit score.

When your creditor reports delinquency on your account, it affects your credit rating. As a result of this being reported to any of the major credit bureaus, it could be hard to get low-interest loans or get credit in the near future. If you want the best alternative that will not affect your credit score, you should consider debt relief.

2. You may pay a hefty fee for settling your debts successfully.

Debt settlement companies take charge of the negotiations with your creditor. These companies will always ask for upfront fees or monthly fees as payment for their services. In other cases, debt settlement companies take part of the settled amount as their fees.

3. Debt settlements are binding agreements.

If creditors agree to settle debts for less than what you owe them, then you enter into a binding agreement, and you cannot ask for a repayment plan later. As part of the agreement, some of these companies will require you not to revive your account again as it might hurt their business reputation.

4. Your credit card account will be closed.

Your credit card account may be closed after completing the debt settlement. Some lenders may decide to part ways with you as a result of your poor payment history.

Alternatives to Debt Settlement

There are many alternative ways to settle your credit card debt if you cannot afford a settlement.

1. A debt consolidation loan.

Debt consolidation is a great way to get out of debt, but it’s not always the right choice. Many people don’t realize that there are two ways to approach debt consolidation; one you do yourself, and another requires a counselor or financial coach. The first option is always risky and, you could end up in more debt than before.

On the other hand, Debt counselors can help you understand your finances better and make informed decisions about consolidating your debts. They also offer personal finance education, which helps clients avoid future problems with money management. So if your goal is getting out of debt for good, consider using a credit counseling service instead!

2. Ask for a hardship program.

Hardship programs are not as effective as debt management measures, but they are still beneficial if you make regular payments to avoid interest costs. Also, unlike bankruptcy, they do not influence your credit rating.

Essentially, a hardship program permits you to pay less than the whole amount owed for six months or longer. During this period, you must continue making minimum monthly payments without incurring any penalties. Following this, there will be two years of lower deductibles based on the amount previously repaid.

3. Contact a credit counseling agency.

You can get in touch with a credit counseling agency and discuss your options for getting out of debt. They will work with your creditors on an individual basis and lower your monthly payments.

Consultants at the credit counseling agency will work directly with you, helping you create a budget that works within your means while paying off debts over time. They also offer debt management plans, which consolidate all your debts into one monthly payment plan. This is very helpful for people with multiple credit cards and loans that are difficult to manage independently.

4. Transfer your debt to another credit card

Credit cards with a balance transfer option are an excellent approach to eliminate your debt. But, before you go for it, you must understand how they function.

Payment of one credit card with another, generally for a longer loan period or cheaper interest rate, is called a balance transfer. It can assist you in paying off your debt faster if utilized correctly.

The bottom line is to read the small print. This is because 3% to 5% of the money you’re moving over may be charged as a balance transfer fee.

Settle your Credit Card Debt Through TurboDebt

With the help of TurboDebt, you can regain control of your money and strive toward a debt-free life by learning about the available credit card debt relief options. Their debt settlement team has years of experience and over 1,000 Google 5-star reviews for credit card debt settlement and financial recovery. You may even be debt-free in as little as 24 to 48 months with their help on how to settle credit card debt. Feel free to contact one of their representatives right now for a free debt relief consultation.

FAQs About How to Settle Credit Card Debt

Can I Settle Credit Card Debt?

Yes, settling credit card debt is possible. First, you will need to contact the creditor in question and explain your financial situation. It may also be possible to settle your credit card debt through a settlement company, like TurboDebt.

How To Get a Settlement on Credit Card Debt

It is possible to settle credit card debt through negotiation with your creditor. Even if you have issues with multiple credit card issuers, you can contact each company in question and offer how much you can pay for your debt.

How To Settle Closed Credit Card Debt

If you’re having trouble paying off your closed credit card debt, one option you have is working with a debt settlement business. If everything else fails, other options are available, such as working with a credit counselor or declaring bankruptcy. Even if you’ve been declined before, you should still contact your credit card company.

Conclusion on How to Settle Credit Card Debt

You should now be aware of all your credit card debt reduction options, as well as what to do with your debts and how to create a repayment strategy. TurboDebt is ready to assist you every step of the way how to settle credit card debt. They offer you a free, no-obligation savings estimate. Besides, they’ll help you discover a viable bankruptcy alternative, which saves you time and money!

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