A Guide To Dealing With Credit Card Debt

According to ValuePenguin, the average credit card debt by Americans as of April 2018 was $9,333 with an outstanding revolving debt of $1.031 trillion. Credit card debt is real and can become strenuous especially if you couple up with your mortgage. You may find yourself immersed in debt such that you find yourself needing a strategy to clear the debt.

One of the options of getting out of a financial mess is by negotiating with your credit card company.  The most significant advantage of credit card debt is that the companies are not allowed to come after your assets since it is unsecured debt.

Credit card debt has the possibility of lowering your credit score which may hinder you from accessing loans. Sometimes, you may also find yourself going to apply for a bank account, but the bank tells you that you are in ChexSystems. It may be because of not paying an overdraft fee which you probably forget such as how it can escape your mind to pay credit card debt.

Some banks don’t use ChexSystems for screening purposes. Here are some of the best non-ChexSystems banks you could opt for

Unlike getting non-ChexSystems, when you are drowning in credit card debt, you will eventually have to pay for the debt. The process could involve several phone calls to the company before agreeing how you will settle the debt.

Below is a guide on how to go about credit card debt

  1. Know how much you owe

Different credit cards have different interest rates. Go through how much debt you have depending on how many credit cards you have. Make a list with the respective interest rates and the contact details of each company as you gear up to talk to them. The settlement process starts here.

  1. Understand the available options

How much can you afford to pay? Your current financial position is what should help determine this. Before calling the credit card company, you need to come up with options that will be comfortable for you.

Below are some of the options:

Coming up with an agreement with the company

There are several options you could present to your credit card company and see if they are flexible:

-Ask them to lower the interest rate

-Reduce the minimum monthly payment

-Remove any additional past late fees charged

It is possible with the options above for your debt to reduce and get to pay within a shorter period. An agreement could work in your favor because it lifts off some of the past burdens and helps you reduce the overall debt.

Settling in lump sums

Only negotiate to this when you have some large amounts of money. Here, it involves getting to make the credit company agree to take less money than you owe them. In this case, it only applies if you are ready to pay upfront.

It is not a guarantee that the company will agree to this option, but when they do, they may reduce your debt to the principal amount.

Consider a hardship plan

In most cases, credit card issuers have a hardship plan which is usually for rainy days. You may be facing a sudden job retrenchment or a severe illness which hinders your ability to pay your credit card debt fully.

Talk to your credit card issuer and explain your situation. If you convince them, they may offer lower interest rates, fees or a smaller minimum payment. However, this is only temporary until you get back on your feet.

Most companies will not advertise this plan but always inquire and see if they offer such.

  1. Think about the risks

Different settlements come with associated risks. When you ask the company to remove any past late fees or lower the minimum monthly payment, they will most likely cut your credit line. You can no longer use the credit card.

How your credit card company reports the debt to the credit bureaus will determine if it will hurt your credit score or not.

If the company records the debt as a charge off, your score will be negatively impacted.

A hardship plan also depends on how the company reports it. Other potential creditors may be alarmed by you going for the hardship plan which could signal that you are a risk for them and may not qualify for their financial support.

Closing credit cards will often affect your credit score. Your credit mix- credit cards, car payments, and mortgages make up 10% of your FICO score. If you close a credit card, the credit mix will change ultimately affecting your credit score.


The amount of debt outstanding could be too much for you to handle such that you seek an alternative such as finding a credit counselor.  Go for a nonprofit consumer credit counseling service. However, if your financial situation is not extreme, pick up the phone and discuss your options with your issuer.

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