How to Settle Credit Card Debt

By Wes Martin - Aug 13, 2009

There are many options that you have available to settle your credit card debt. No matter how much credit card debt you have, it is possible to get out of debt in a few months to a few years. In the article, I will discuss effective time tested and proven ways to get out of debt fast and highlight the pros and cons of each approach

  1. Close your credit cards and reduce rates – When you fall behind on your credit card payments, one of the first things your credit card company does is greatly increase your interest rate. What this does is add a ton of money to the balance you owe. If you’ve fallen behind and your rates have drastically increased, the best course of action is to close the credit card account. Why? Because if you close the account, you can request that that the interest be lowered in the single digits (1-6%) and negotiate an amount each month to pay off your balance. It is very easy to do and most credit card companies will agree for you to do that. The disadvantage in doing this is that your credit score may be reduce temporarily; however, you will end up saving a lot of money in interest payments.
  2. Debt Settlement Programs – Debt settlement programs allow you to pay back a small fraction of the balance owed through a lump sum settlement. When you join a debt settlement program, you stop making payments on your credit cards and pay the debt settlement firm each month. Eventually the debt settlement firm will use the money to negotiate a settlement with each credit card company. One disadvantage of debt settlement is that you credit score will be lower; however, debt settlement programs are best suited for people who are already behind on there payments.
  3. Debt Consolidation Programs – If you have multiple credit cards and are looking for a way to either lower your monthly payments or be on a path to paying off the debt, a debt consolidation program will help you achieve that goal. When you join a debt consolidation program, you pay the debt consolidation firm and they pay your creditors for you. One benefit of a debt consolidation program is that you only have 1 payment to make. Most cases debt consolidation companies negotiate with your creditors to reduce fees and pass the savings to you.

Debt Consolidation Union specializes in debt consolidation and debt settlement programs. Since 2006, we’ve helped thousands of people get on a path to becoming debt free. To find out more about how we can help you, call us toll free at 1-800-957-8310 or fill out the free debt consultation form.