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Right now, the average American is carrying about $7,950 in credit card debt. And, while this type of high-rate debt is never ideal, it can be even more of an issue in today’s economic environment. After all, credit card rates have been climbing recently, and if your balances aren’t paid off each month, the interest charges can accumulate quickly. That, in turn, can result in high minimum payments that are difficult to maintain.
That isn’t the only troubling credit card statistic worth noting right now, either. In addition to today’s high average card balances, recent reports show that maxed-out card accounts and delinquent credit card payments are also on the rise, signaling that many people are struggling to manage what they owe in today’s economy.
If you’re one of them, the good news is that there are debt relief options, like credit card debt forgiveness, that can help you get rid of your credit card debt. With credit card debt forgiveness, the goal is to settle your outstanding credit card balances for a portion of what you owe. And, this debt relief option may be a good one to consider this August, in particular.
Start comparing your debt relief options online today.
3 big reasons to pursue credit card debt forgiveness this August
Here are a few big reasons you may want to pursue credit card debt forgiveness this August:
The high-rate environment
In today’s high-rate environment, the average credit card rate currently hovers near 22%. In turn, the interest charges that accrue on the balances you carry can make it increasingly difficult to pay down what you owe.
For example, if you’re carrying a credit card balance of $6,500 and have a 22% APR and only make minimum payments (interest plus 1% of the balance) each month, it would take about 307 months to pay off the debt. And, you would pay an additional $11,276.54 in interest over that time.
So, with rates as high as they are right now, it’s important to get rid of your credit card debt as soon as possible. Otherwise, you could end up paying a lot more in interest than you owed on your original balance.
Find out how the right debt relief company could help you now.
Ongoing inflation pressures
While inflation has cooled from its recent peaks, it’s not under control just yet. At 3%, the current inflation rate remains above the Federal Reserve’s 2% target. And, as the cost of essentials like food, housing and fuel continue to rise, many Americans find themselves with less money to put toward debt repayment.
That’s where credit card debt forgiveness can help. By settling your debts for less than what you owe, you may be able to free up resources to cope with today’s rising costs while still addressing your outstanding debts.
Debt reduction potential
When you pursue debt forgiveness, the goal is to get your creditors to accept a lump-sum payment to settle the debt for less than what you owe. If successful, this process can result in substantial savings, allowing you to become debt-free much faster than you otherwise would be.
For example, some debt settlement companies report that they can reduce debts by 50% or more. While results can vary widely, even a 30% reduction on a $7,500 balance would mean savings of about $2,250. This can make the difference between a manageable debt repayment plan and years of financial struggle.
The bottom line
While there are many debt relief options to consider this August, credit card debt forgiveness could be particularly compelling if you’re grappling with overwhelming debt. After all, this option can lead to significant savings and expedite the repayment process overall, so it may be worth pursuing if you’re unable to pay off what you owe on your own.
That said, there are lots of debt relief options to consider, and in some cases, it could make more sense to pursue debt consolidation or enroll in a debt management program instead. So, make sure you understand what choices are available to you and weigh the potential pros and cons of each option before making any decisions.
Angelica Leicht is senior editor for Managing Your Money, where she writes and edits articles on a range of personal finance topics. Angelica previously held editing roles at The Simple Dollar, Interest, HousingWire and other financial publications.
