Three compelling motivations, according to experts, for taking action on credit card debt relief this June
Video: Coping with High Credit Card Debt amid Rising Inflation
Consumers are finding it difficult to escape financial burdens as inflation persists and credit card interest rates remain elevated. The average credit card rate stands above 21%, a figure expected to remain stagnant in the foreseeable future, and credit card balances have surged to $1.18 trillion, a 6% increase from a year ago.
Living costs and the price hikes in various goods and services exacerbate the challenge of exiting credit card debt. Even proven strategies, like the snowball and avalanche methods, may not be enough to ensure a swift recovery.
For some indebted consumers, debt forgiveness on credit cards may be a prudent route. This refers to creditors agreeing to let debtors settle their debt for less than the original amount, usually by paying a lump sum. If you are grappling with high-interest debt, this June could be a strategic time to explore debt forgiveness. We spoke to experts to find out why this might be the ideal move.
Discover your credit card debt forgiveness eligibility here.
Reasons to Consider Credit Card Debt Forgiveness in June 2023
- Credit card rates remain high and appear to be holding steady, with no significant drop on the horizon when the Federal Reserve lowers its rate, which is expected to occur one or more times this year. The Federal Reserve's impact on credit card rates is minimal, meaning relief may be slow to come.
- The debt relief process is lengthy, with successful resolution ranging from 24 to 48 months in some instances. starting the process as soon as possible is crucial if you are contemplating debt forgiveness.
- Debt forgiveness causes less damage to your credit compared to other options, such as defaulting on your debt or filing for bankruptcy. Although debt forgiveness affects credit scores, it shows a level of effort towards repayment, making it more attractive to future lenders compared to the long-term impact of bankruptcy.
The Gist
Shouldering significant credit card debt is challenging, and debt forgiveness could be a viable solution for some borrowers. However, keep in mind that this will have an impact on your credit, and the process can take several years. As a result, it is best used as a "second-to-last resort," and bankruptcy should be considered last.
For struggling consumers, it is essential to assess their credit card debt and consider professional advice before exploring debt relief options such as settlement programs, debt consolidation loans, or credit counseling services. Working with creditors to negotiate reduced balances is crucial for those eager to escape the burden of high-interest debt.
Aly J YaleAly J. Yale is a contributing writer for the Managing Your Money section for ourNews.com, covering diverse personal finance topics such as investing, home buying, loans, and more.
Consumers facing high-interest credit card debt may find debt forgiveness an appealing resolution, given that credit card rates remain steady and minimal relief is anticipated from the Federal Reserve. However, one should bear in mind that debt forgiveness can have an impact on credit and should be considered a "second-to-last resort," with bankruptcy as the last option.
For those burdened with significant credit card debt, professional advice is crucial before exploring debt relief options, such as settling accounts, consolidating loans, or seeking credit counseling services. Negotiating reduced balances with creditors is key for those eager to escape the weight of high-interest debt and celebrate a brighter financial future.
