The article discusses the importance of paying off credit card debt before making any large purchases or traveling during the summer. With around 60% of Americans living paycheck to paycheck and struggling to make minimum payments on their credit cards, there is a growing concern about delinquent accounts and damaged credit scores. The average credit card balance for Americans is $5,910, and many are finding it challenging to keep up with payments. To address these issues, the article suggests several options for managing credit card debt and avoiding negative repercussions on credit scores.
One option is to contact your credit card company as soon as you anticipate difficulty making payments. By explaining your situation, you may be able to negotiate a payment plan, move your payment due date, or lower your annual percentage rate (APR). It is important to get any agreements in writing to avoid misunderstandings in the future. Credit card issuers may also offer relief or hardship programs that can help you avoid going into arrears or having your account charged off, which can negatively impact your credit score.
Another option is to seek help from non-profit credit counseling agencies or debt management programs. These programs can assist in budgeting, negotiating with creditors, and creating a new payment plan that aligns with your financial situation. Additionally, reworking your budget and finding ways to save or earn more money can help you stay on top of your credit card payments. Cutting unnecessary expenses, applying for government assistance, and exploring additional income opportunities are all strategies that can help alleviate financial strain.
Transferring your credit card balances to a 0% introductory APR credit card can also be beneficial if your credit score is still good enough to qualify. This strategy can save you time and money in paying off your debt, but it is essential to continue making payments on the new card to avoid early termination of the introductory APR period. If getting a 0% introductory APR card is not feasible, applying for a debt consolidation loan may be a viable alternative to streamline payments and potentially lower your interest rate.
Despite the benefits of credit card hardship programs, there are potential downsides that could impact your credit score. Settling your debt for less than originally agreed upon, having your credit limit reduced or account closed by the credit card company, and the possibility of negative consequences from signing up for a hardship program are all factors to consider. It may be best to consult with a financial advisor or credit counselor to determine the best course of action for managing credit card debt and minimizing the impact on your credit score.
