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Credit card maxed out? Here are 3 things to do (and 3 to avoid)
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Issues with credit card accounts have been compounding recently as more Americans struggle to keep up with high inflation and soaring interest rates. For example, the credit card delinquency rate jumped to nearly 9% during the first quarter of 2024. And, recent data shows that many cardholders — and members of Gen Z in particular — are now facing issues with maxed-out credit card accounts, too.
Part of the issue is that the current high inflationary environment is putting a strain on household budgets, with the latest inflation report showing that prices for essential goods and services are rising at a pace of 3.4%. At the same time, the Federal Reserve has held interest rates at a 23-year high over the last several months in an effort to tame inflation, which has pushed the average credit card interest rate to over 21%. This potent combination of higher costs and borrowing rates is causing many people’s finances to become stretched.
Having a maxed-out credit card or two is not only stressful in many cases, but it can also have a tangible impact on your finances. That’s because when your credit utilization is high, it can negatively affect your credit score, making it harder and more expensive to borrow money in the future. And, the compounding interest charges on a maxed-out card can quickly spiral out of control, making it even more difficult to pay off the debt. Fortunately, there are a few moves you can make (and a few you should avoid) if you’re dealing with this issue.
Compare your debt relief options and find out what help is available to you here.
Credit card maxed out? Here are 3 things to do
If you find yourself in the unfortunate situation of having a maxed-out credit card, it’s important to take action. Here are a few things you may want to do if you’re dealing with this issue:
Inquire about credit card hardship programs
During times of financial hardship, many major credit card issuers offer relief programs to customers that can provide some breathing room in terms of your payments. These programs may allow you to temporarily reduce or suspend your minimum payments, waive late fees or even reduce your interest rate for a period of time.
Reaching out to your card issuer and explaining your situation is often the first step to accessing these hardship programs. You may also have to provide documentation related to the specific hardship you’re facing, whether it’s a short-term issue like a job loss or a chronic medical condition that’s impacting your finances. But that can be a small sacrifice to make if the result is paying less on your credit card debt, even temporarily.
Explore how the right debt relief company could help you tackle your credit card debt.
Talk to a debt relief company
If you’re dealing with overwhelming credit card debt across multiple accounts, you may want to talk to a debt relief company about the options it can provide, which may include:
- Debt consolidation programs: With a debt consolidation program, the debt relief company seeks to consolidate your various credit card debts into a single, new loan with a lower interest rate than you’re currently paying. This simplifies your monthly payments into one bill, ideally with a lower total payment than you were making across all your different cards.
- Debt management plans: With this option, you deposit a single monthly payment with the debt relief company, which then disburses payments to each of your creditors on your behalf. In many cases, the debt relief company has negotiated lower interest rates and fees with lenders specifically for customers enrolled in these debt management plans. The convenience of making just one payment is a perk to utilizing this type of program, as is the potential interest rate reductions.
- Debt settlement programs: With a debt settlement program, you make monthly payments into an escrow-like account with the debt relief company. Once a sufficient balance has accumulated, the company attempts to negotiate lump sum settlements with each of your creditors for less than you owe. Settled debts are paid off from your escrow funds. The major downside is that your credit score will take a major hit, as the settled debts are reported as “settled for less than agreed.” Settled debt may also be considered taxable income by the IRS.
It’s also worth noting that debt relief companies typically charge fees for their services. And it’s crucial to thoroughly vet any debt relief company before enrolling to ensure they are legitimate and that you understand exactly what services they provide and are aware of all fees involved.
Take a measured DIY approach to paying off what you owe
If your income situation allows you to continue making minimum payments on your maxed-out cards, consider implementing a strategy like the debt snowball or debt avalanche method. Both strategies can provide a psychological boost and help you make meaningful progress on paying down your debts.
With the snowball approach, you focus on paying off your smallest debt first while making minimum payments on the others. Once the smallest debt is repaid, you roll the money from that payment onto the next largest debt once the first is paid off. The avalanche method works similarly, but it prioritizes paying off the debt with the highest interest rate first.
And, while focusing on getting existing debts under control should be the top priority when your cards are maxed out, increasing your income could also be considered. This can be done through a temporary side gig, freelance work or a career change, but whatever the approach, the goal is to find extra funds to throw at your credit card balances.
3 things to avoid if your credit cards are maxed out
There are also some actions you should avoid if your credit cards are maxed out, as they can potentially make the situation worse. These include:
Ignore the issue
If you’re overwhelmed by your credit card debt, it may be tempting to simply ignore the issue and stop making payments on your maxed-out card, but this will only lead to late fees, penalty APRs and potentially even legal action from your creditors. Ignoring the problem will not make it go away and can severely damage your credit score in the interim.
Continue taking on more debt
While it may seem like a quick fix, taking out personal loans or opening new credit cards to pay off or transfer the balance from a maxed-out card is often a recipe for disaster. This approach can lead to a vicious cycle of debt that becomes increasingly difficult to escape, so try to avoid it if you can.
Immediately consider bankruptcy
While bankruptcy may be a viable option for some borrowers who are in severe financial distress, it should be an absolute last resort to consider in most cases. After all, bankruptcy can have long-lasting negative impacts on your credit score and ability to borrow money in the future — and it’s the most drastic approach you can take to your credit card debt. So, in most cases, you should try to exhaust all other options before considering this measure.
The bottom line
Having a maxed-out credit card is a stressful and potentially damaging situation, but it’s important to take a proactive approach to resolve the issue. While it may be tempting to ignore the problem or take on more debt to make ends meet, these approaches can often make the situation worse in the long run. Try exploring options like hardship programs, debt relief strategies and increasing your income instead. After all, with discipline and a solid plan, it is often possible to dig yourself out of a maxed-out credit card hole.
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MINNEAPOLIS — Minnesota Vikings rookie Khyree Jackson died overnight in a car accident.
The Upper Marlboro, Maryland native played for Alabama and Oregon. He was drafted by the Vikings in April in round 4 as the 108th overall pick.
He was 24 years old.
“Our thoughts are with Khyree’s family, friends, teammates and coaches, as well as all the victims of this tragic accident,” the Vikings wrote on X.
Vikings head coach Kevin O’Connell said he was “crushed” by the news of Jackson’s death.
“In our short time together, it was evident Khyree was going to develop into a tremendous professional football player, but what was more impressive was his desire to become the best person he could be for his family and those around him,” O’Connell added.
The crash happened in Upper Marlboro shortly after 3 a.m. and involved three cars, according to Maryland state police. Investigators believe the driver of a silver Infiniti car tried to change lanes at a high rate of speed and struck the car that Jackson was in, as well as a Chevrolet Impala.
The two other occupants of Jackson’s car also died in the crash. The occupants of the other cars were not hurt.
Officials believe that alcohol could have been a contributing factor in the crash.
In a statement, the Minnesota Vikings say they have offered support to Jackson’s family, and are offering counseling and emotional support to the players who seek it.
This is a developing story. Check back with WCCO.com for more.
Note: The above video first aired on June 24, 2024.
Alfred Handley leaned back in his wheelchair alongside a major Phoenix freeway as a street medicine team helped him get rehydrated with an intravenous saline solution dripping from a bag hanging on a pole.
Cars whooshed by under the blazing 96-degree morning sun as the 59-year-old homeless man with a nearly toothless smile got the help he needed through a new program run by the nonprofit Circle the City.
“It’s a lot better than going to the hospital,” Handley said of the team that provides health care to homeless people. He’s been treated poorly at traditional clinics and hospitals, he said, more than six years after being struck by a car while he sat on a wall, leaving him in a wheelchair.
Circle the City, a non-profit that works in multiple cities and hospitals and treats about 9,000 people annually, introduced its IV rehydration program as a way to protect homeless people in Phoenix from life-threatening heat illness as temperatures regularly hit the triple-digits in America’s hottest metro.
Matt York / AP
Homeless people accounted for nearly half of the record 645 heat-related deaths last year in Maricopa County, which encompasses metro Phoenix. As summers grow warmer, health providers from San Diego to New York are being challenged to better protect homeless patients.
Dr. Liz Frye, vice chair of the Street Medicine Institute which provides training to hundreds of healthcare teams worldwide, said she didn’t know of groups other than Circle the City administering IVs on the street. The organization also distributes tens of thousands of water bottles each summer and tries to educate people about hot weather dangers.
“But if that’s what needs to happen to keep somebody from dying, I’m all about it,” Frye said.
Bringing care to people in need
The amount of people requiring treatment for heat illnesses is rising. The Boston Health Care for the Homeless Program, featured in last year’s book, “Rough Sleepers,” now sees patients with mild heat exhaustion in the summer after decades of treating people with frostbite and hypothermia during the winter, said Dr. Dave Munson, the street team’s medical director.
“It’s certainly something to worry about,” said Munson, noting that temperatures in Boston hit 100 degrees with 70% humidity during June’s heat wave. Homeless people, he said, are vulnerable to very hot and very cold weather not only because they live outside, but they often can’t regulate body temperature due to medication for mental illness or high blood pressure, or because of street substance use.
The Phoenix team searches for patients in homeless encampments in dry riverbeds, sweltering alleys and along the canals that bring water to the Phoenix area. About 15% are dehydrated enough for a saline drip.
Matt York / AP
“We go out every day and find them,” said nurse practitioner Perla Puebla. “We do their wound care, medication refills for diabetes, antibiotics, high blood pressure.”
Puebla’s street team ran across Handley and 36-year-old Phoenix native Phillip Enriquez near an overpass in an area frequented by homeless people because it’s near a facility offering free meals. Across the road was an encampment of tents and lean-tos along a chain-link fence.
Enriquez sat on a patch of dirt as Puebla started a drip for him. She also gave him a prescription for antibiotics and a referral to a dentist for his dental infection.
Living outside in Arizona’s broiling sun is hard, especially for people who may be mentally ill or use sedating drugs like fentanyl that make them less aware of their surroundings. Stimulants like methamphetamine contribute to dehydration, which can be fatal. Dr. Matt Essary, who works with Circle in the City’s mobile clinics, said the organization also often treats surface burns that can happen when a medical emergency or intoxication causes someone to fall on a sizzling sidewalk.
Matt York / AP
Temperatures this year have reached 115 degrees in metro Phoenix, where six heat-related deaths have been confirmed through June 22. Another 111 are under investigation, and the city is seeing an “increasing” number of patients with heat illnesses every year, according to Dr. Aneesh Narang, the assistant medical director of emergency medicine at Banner Medical Center-Phoenix, which treats many homeless people with heat stroke.
Narang’s staff works frequently with Circle the City, whose core mission is providing respite care, with 100 beds for homeless people not well enough to return to the streets after a hospital stay.
Extreme heat worldwide requires a dramatic response, said physician assistant Lindsay Fox, who cares for homeless people in Albuquerque, New Mexico, through an initiative run by the University of New Mexico’s School of Medicine.
Three times weekly, Fox treats infections, cleans wounds and manages chronic conditions in consultation with hospital colleagues. She said the prospect of more heat illness worries her.
Highs in Albuquerque can hit the 90s and don’t fall enough for people living outside to cool off overnight, she said.
“If you’re in an urban area that’s primarily concrete, you’re retaining heat,” she said. “We’re seeing heat exposure that very quickly could go to heat stroke.”
Serious heat stroke is far more common in metro Phoenix, where Circle the City is now among scores of health programs for the homeless in cities like New York, San Diego and Spokane, Washington.
Circle the City works with medical staff in seven Phoenix hospitals to help homeless patients get after-care when they no longer need hospitalization. It also staffs two outpatient clinics for follow-up.
Rachel Belgrade waited outside Circle the City’s retrofitted truck with her black-and-white puppy, Bo, for Essary to write a prescription for the blood pressure medicine she lost when a man stole her bicycle. She accepted two bottles of water to cool off as the morning heat rose.
“They make all of this easier,” said Belgrade, a Native American from the Gila River tribe. “They don’t give you a hard time.”
