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Credit card debt has become a major issue in the United States. As of Q1 2024, Americans held a total credit card balance of $1.1 trillion, according to the Federal Reserve Bank of New York. And, the latest Quarterly Report on Household Debt and Credit from the New York Fed shows that there has been an uptick in serious payment delinquencies and maxed-out credit cards nationwide, showcasing the negative impact high credit card debt is having on people’s finances.
High amounts of credit card debt can have a detrimental effect on everything from your credit score to your borrowing capacity and your ability to save for important goals. So, it’s important to try and get rid of it as quickly as possible. And, while debt consolidation, which involves taking out a new loan to pay off what you owe, is a common approach, not everyone has the credit score or desire to take on additional debt. Fortunately, there are strategies to help you eliminate your credit card debt without borrowing more money.
Ready to get rid of your credit card debt? Explore your debt relief options here.
5 ways to get rid of credit card debt without a new loan
These options could help you tackle what you owe without an additional loan:
Transfer your balance to a new card with a promotional rate
Balance transfer credit cards are an effective tool for managing credit card debt. These cards typically offer a promotional 0% APR period (or a very low APR period) on balance transfers. While it varies from one card to the next, the promotional APR period typically lasts between 12 to 21 months. That gives you an extended period of interest-free payments, but you’ll typically have to pay a balance transfer fee (generally 3% to 5% of the transferred amount) in return.
To maximize the benefits, you should aim to pay off the entire balance before the promotional period ends. If you can’t pay it all off, try to pay down as much as possible to minimize the interest you’ll pay when the regular APR kicks in.
Find out how the right debt relief company could help you get out of debt quickly.
Try to negotiate with your creditors
Many credit card issuers are willing to work with cardholders who are struggling due to temporary hardships. By being proactive and reaching out to your creditors, you may be able to negotiate to get lower rates, waived fees, extended payment timelines or even temporary pauses to your payments.
As you negotiate, it’s important to be honest about your financial situation and demonstrate your commitment to repaying the debt. It may be helpful to prepare a budget showing your income and expenses before the call to clearly illustrate your need for more favorable terms.
Enroll in a debt management plan
Debt management plans, which are typically offered by credit counseling agencies, are designed to create a manageable repayment schedule based on your budget. And, the credit counselor you work with may also negotiate lower interest rates and waived fees with your creditors. While these plans can be effective, they usually require you to close your credit card accounts and refrain from opening new ones as you pay off what you owe. This can temporarily impact your credit score but may be worth it for the long-term benefits.
Take advantage of credit card hardship programs
Many credit card issuers will offer hardship programs for customers facing financial difficulties. These programs are designed to provide temporary relief and may include reduced interest rates, lower minimum payments, waived fees or temporary payment forbearance.
While that can provide relief, these hardship programs are typically short-term solutions, lasting anywhere from a few months to a year. If you want to enroll in a hardship program, start by contacting your credit card issuer’s customer service department and ask about available options. Be prepared to explain your financial situation and provide documentation if required.
Use a debt settlement program
Many debt relief companies also offer debt settlement (or debt forgiveness) programs, which can help you pay off your card debt for significantly less than what you owe. With a debt settlement program, the goal is to get your creditors to accept a lump-sum payment that’s lower than your balance to “settle” the debt. If successful, the remaining portion of the balance is forgiven.
While debt settlement can potentially reduce the amount you owe, it comes with some drawbacks to note. It can severely damage your credit score. Your creditors are not obligated to accept settlement offers, either — and your settled debts may be reported to the IRS as taxable income. However, this type of program can also offer significant relief, so if you can’t afford your card payments, it may be worth considering.
The bottom line
While credit card debt can be overwhelming, there are multiple strategies available to tackle it without taking on new loans. And, by understanding your options and choosing the approach that best fits your financial situation and goals, you can start working toward becoming debt-free and achieving greater financial stability.
