CBS News
How to qualify for credit card debt forgiveness this October
Getty Images
In today’s economy, many people are finding it difficult to keep up with their financial obligations. After all, the cost of living has risen dramatically over the last couple of years, driven by higher housing prices, increased grocery bills and rising expenses for basic necessities like utilities and transportation. For many, these higher costs are eating into their budgets, leaving little room for unexpected expenses or emergencies. And, in some cases, the financial strain has forced people to rely on their credit cards to make ends meet, leading to an increase in consumer debt nationwide.
As a result, credit card debt is climbing. During the second quarter of this year, the total amount of credit card debt nationwide surpassed $1.14 trillion for the first time in history, and millions of Americans are now carrying high-rate card balances. There has also been an uptick in the number of cardholders who are struggling to stay on top of their monthly credit card payments, which can quickly become a heavy burden, especially considering how fast the late fees and interest charges compound.
If you’re one of the many cardholders who’s struggling to manage their credit card debt, you may be considering your debt relief options. One option that could help substantially ease the burden is credit card debt forgiveness, also known as debt settlement, which can reduce your outstanding debt by 30% to 50% on average. But how can you qualify for credit card debt forgiveness if you need the extra help this October? That’s what we’ll explain below.
Is your credit card debt compounding? Find out how to eliminate it now.
How to qualify for credit card debt forgiveness this October
There are no strict, formal qualifications for credit card debt forgiveness. However, it’s important to understand what the process typically entails and the conditions that can improve your chances of success.
Credit card debt forgiveness involves negotiating with your creditors to settle your debt for less than the full amount owed. This can be done on your own, but most people choose to work with a professional debt relief company, which can handle negotiations on your behalf and offer guidance throughout the process.
If you plan to work with a debt relief company, there are some common requirements to be aware of. One is that most debt relief companies have a minimum debt threshold you’ll need to meet before they will take you on as a debt forgiveness client.
This minimum is typically around $7,500 in unsecured debt, though it can vary from one company to the next. That minimum debt threshold ensures that you have enough debt to make the settlement process worthwhile for both you and the company handling your negotiations. If your total debt is less than this, you may not qualify.
Debt forgiveness programs are also generally designed to help cardholders who are experiencing significant financial hardship. This can include losing a job, dealing with unexpected medical expenses or facing other financial challenges that make it difficult to pay off your credit card debt.
When you enter into debt settlement negotiations, creditors are more likely to agree to settle for less if you can demonstrate that you’re unable to pay the full amount. This means that to qualify, you may need to provide evidence of your financial hardship, such as income statements, medical bills or documentation of other debts.
It’s also important to note that debt settlement is typically reserved for cardholders who are behind on their credit card payments. Creditors are less likely to agree to settle for less if you’ve been consistently making minimum payments, as this shows that you’re able to manage your debt, albeit slowly. If you’ve missed payments or are at risk of defaulting on your credit card, you’ll be in a better position to negotiate a settlement.
Learn more about debt forgiveness today.
What to do if you don’t qualify for credit card debt forgiveness
If you find that you don’t meet the criteria for a formal debt forgiveness program, or if you prefer to explore other options, consider the following alternatives:
- DIY debt settlement: If you don’t qualify through a debt relief company, you can attempt to negotiate settlements directly with your creditors. While the negotiations can be challenging, it allows you to avoid the requirements and the fees associated with debt relief companies.
- Debt consolidation: If your credit score is still relatively good, you may qualify for a debt consolidation loan or a balance transfer credit card with a low introductory interest rate.
- Credit counseling: Credit counseling agencies can provide budgeting advice and may be able to help you enroll in a debt management plan to lower interest rates and consolidate payments.
- Bankruptcy: While a last resort, bankruptcy can provide a fresh financial start for those with overwhelming debt.
The bottom line
Credit card debt forgiveness can be a lifeline for those facing overwhelming debt, but it’s important to understand how to qualify before pursuing this option. If you’re dealing with a significant amount of credit card debt and financial hardship this October, consider exploring debt forgiveness as a potential solution. But even if you don’t qualify, there are other paths to managing your debt, including debt management plans, consolidation loans and bankruptcy as a last resort. By taking proactive steps and seeking out the right debt relief option for your situation, you can start to regain control of your financial future.
U.S. stocks plummeted in one of their worst days of the year after the Federal Reserve forecast Wednesday it may deliver fewer shots of adrenaline for the economy in 2025 than it had earlier projected.
The S&P 500 fell 178 points, or 3%, pulling it further from its all-time high set a couple weeks ago. The Dow Jones Industrial Average lost 1,123 points, or 2.6%, while the Nasdaq composite dropped 3.6%.
The Fed said Wednesday it’s cutting its benchmark interest rate for a third time this year, continuing the sharp turnaround begun in September when it started lowering rates from a two-decade high to support the job market. Wall Street loves lower interest rates, but the Dec. 18 cut had been widely expected by Wall Street.
Why is the stock market down today?
Investors were unsettled by the Fed’s forecast for fewer cuts in 2025, even though many economists had already been paring their expectations given sticky inflation.
“Markets have a really bad of habit of overreacting to Fed policy moves,” Jamie Cox, managing partner for Harris Financial Group, said in an analyst note. “The Fed didn’t do or say anything that deviated from what the market expected—this seems more like, I’m leaving for Christmas break, so I’ll sell and start up next year.”
The bigger question centers on how much more the Fed could cut next year. A lot is riding on it, particularly after expectations for a series of cuts in 2025 helped the U.S. stock market set an all-time high 57 times so far in 2024.
Fed officials released projections on Wednesday showing the median expectation among them is for two more cuts to the federal funds rate in 2025, or half a percentage point’s worth. That’s down from the four cuts they had expected just three months ago.
“We are in a new phase of the process,” Fed Chair Jerome Powell said. The central bank has already quickly eased its main interest rate by a full percentage point, to a range of 4.25% to 4.50%, since September.
What happened to the stock market today?
Asked why Fed officials are looking to slow their pace of cuts, Powell pointed to how the job market looks to be performing well overall and how recent inflation readings have picked up. He also cited uncertainties that will require policy makers to react to upcoming, to-be-determined changes in the economy.
While lower rates can goose the economy by making it cheaper to borrow and boosting prices for investments, they can also offer more fuel for inflation.
Powell said some Fed officials, but not all, are also already trying to incorporate uncertainties inherent in a new administration coming into the White House. Worries are rising on Wall Street that President-elect Donald Trump’s preference for tariffs and other policies could further juice inflation, along with economic growth.
“When the path is uncertain, you go a little slower,” Powell said. It’s “not unlike driving on a foggy night or walking into a dark room full of furniture. You just slow down.”
One official, Cleveland Fed President Beth Hammack, thought the central bank should not have even cut rates this time around. She was the lone vote against Wednesday’s rate cut.
Wall Street’s worst performers
The reduced expectations for 2025 rate cuts sent Treasury yields rising in the bond market, squeezing the stock market.
The yield on the 10-year Treasury rose to 4.51% from 4.40% late Tuesday, which is a notable move for the bond market. The two-year yield, which more closely tracks expectations for Fed action, climbed to 4.35% from 4.25%.
On Wall Street, stocks of companies that can feel the most pressure from higher interest rates fell to some of the worst losses.
Stocks of smaller companies did particularly poorly, for example. Many need to borrow to fuel their growth, meaning they can feel more pain when having to pay higher interest rates for loans. The Russell 2000 index of small-cap stocks tumbled 4.4%.
Elsewhere on Wall Street, General Mills dropped 3.1% despite reporting a stronger profit for the latest quarter than expected. The maker of Progresso soups and Cheerios said it will increase its investments in brands to help them grow, which pushed it to cut its forecast for profit this fiscal year.
Nvidia, the superstar stock responsible for a chunk of Wall Street’s rally to records in recent years, fell 1.1% to extend its weekslong funk. It has dropped more than 13% from its record set last month and fallen in nine of the last 10 days as its big momentum slows.
“As we wrote in our 2025 outlook a couple of weeks ago, stretched positioning and sentiment left stocks vulnerable to a sell-off,” Jeff Buchbinder, chief equity strategist for LPL Financial said in a note about today’s market sell-off. “The big jump in inflation expectations and related bond sell-off was a convenient excuse. Once support from tech evaporated, no other groups were able to step in to fill that gaping hole.”
Watch CBS News
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.
Watch CBS News
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.
