From Yahoo Finance: 2025-06-04 19:52:00

The burden of credit card debt is at an all-time high, with nationwide balances exceeding $1 trillion. The average credit card debt per borrower is around $6,580 to $6,730. Debt relief options claim to help, but come with risks like added interest and fees that can negatively impact credit scores.

Debt relief or settlement companies offer programs to negotiate with lenders but may encourage you to stop making payments. Settlements can take years, potentially leading to added interest, penalty APRs, and late fees. Settlements may also result in higher overall balances and damage credit scores.

Debt relief companies can charge fees up to 25% of total debt, potentially costing thousands. Settlement processes can take years, impacting credit scores and leading to calls from debt collectors. Debt forgiveness savings may be taxable income, requiring consultation with a tax professional.

Be cautious of debt relief scams that promise too-good-to-be-true results. Scammers may charge upfront fees without delivering results. Legitimate debt settlement companies must meet specific criteria before charging fees, ensuring transparency and progress towards debt resolution.

Consider negotiating with credit card companies directly or using a balance transfer credit card with 0% introductory APR. Personal loans can also consolidate debt at potentially lower interest rates. Credit counseling offers budgeting and debt management plans through reputable nonprofit organizations.

Always research and compare different debt payoff options before committing to a program. Verify the legitimacy of any company offering debt relief services and be wary of upfront fees. Consult with reputable credit counseling organizations for cost-effective ways to manage and pay off debt.

Read more: Are credit card debt relief programs legit?