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Explore Tools to Help You Manage Your Own Credit Card Debt
Every financial situation is unique. But there are several options available if you wish to manage your debt on your own.
Consider Credit Hardship Plans for Debt Relief
If you are struggling to pay your credit card debt, you may be able to renegotiate repayment terms on your own. You have the option to ask each creditor about their credit hardship plans. Sometimes called assistance programs or hardship cases, such short-term plans offer some form of relief to struggling borrowers without their accounts falling into default. Here’s a breakdown of what to expect:
Fees and Interest Rates
Through a hardship plan, some creditors will temporarily remove fees, lower interest rates or even forgive a portion of your debt.
Be Sure to Set Up Autopay
You will need to set up automatic monthly payments for each credit card and carefully monitor your accounts to ensure your principal balance is going down.
Paying More Than the Minimum
You should try to pay more than the minimum amount due as much as possible to save on interest charges. In most cases, you should focus on paying the card with the highest interest rate first to obtain the biggest savings.
Knocking Out Smaller Balances
If you have multiple cards and have difficulty making all payments on time, you may want to pay off some of the smaller balances first so you will have fewer payments and less potential for late fees.
Creditors May Forgive a Portion of Your Debt
It’s important to know that if a creditor agrees to forgive a portion of your debt, it will be reported to the credit bureaus, which may negatively impact your credit rating. Additionally, if the forgiven amount is more than $600, you may have to pay taxes on it.
Contact Each Creditor
If you have multiple credit card debts, you will need to contact each credit card company separately about their hardship plans.
Get on a Budget and Stick to it
Throughout this process, you’ll need to create a realistic budget and stick to it. Sticking to your budget will help ensure monthly payments are submitted on time and in full.
Evaluate Self-Guided Debt Payoff Methods
If you don’t qualify for hardship plans or want a different, self-guided approach to paying off your debt, there are two popular methods that don’t require calling creditors but will help you get out of debt with focus and determination: Debt Snowball and Debt Avalanche.
Debt Snowball
This method pays off debts from smallest to largest, ignoring interest rates. As each debt is paid, payments snowball onto the next, building momentum until all debts are cleared. It’s great for those who want quick wins to stay motivated.
Debt Avalanche
This method focuses on saving interest by paying minimums on all debts and putting extra money toward the highest-interest debt first, then moving to the next highest once it’s paid off.
Read our blog for a deeper look at the Debt Snowball and Debt Avalanche methods. Although these are among the more well-known strategies, there are several other approaches to pay off debt that may be a better fit for your situation.
What Can I Do Right Now?
You can educate yourself about the credit card repayment process and participate in a free credit counseling session. During a credit counseling session, we review your debt, income and expenses to determine your best path forward. You will receive a credit report summary, customized budget, educational resources and an action plan explaining the debt relief solution that makes the most sense for your situation. You can complete the process online 24/7. Even if you choose to manage your own debt, you may still benefit from receiving the credit report summary, budget and educational resources.
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One morning, when Gregor Samsa woke from troubled dreams, he found himself transformed in his bed into a horrible vermin. He lay on his armour-like back, and if he lifted his head a little he could see his brown belly, slightly domed and divided by arches.
One morning, when Gregor Samsa woke from troubled dreams, he found himself transformed in his bed into a horrible vermin. He lay on his armour-like back, and if he lifted his head a little he could see his brown belly, slightly domed and divided by arches.
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