Credit card debt among retirees has reached alarming levels, with 68% of retirees now reporting that they have outstanding credit card balances, according to the Employee Benefit Research Institute’s latest Spending in Retirement Survey. This marks a dramatic increase from 40% in 2022 and 43% in 2020, signaling that credit card debt is a growing financial challenge for America’s retired population.

This trend is particularly concerning given that only about half of retirees maintain adequate emergency savings to cover three months of expenses. Carrying high-interest credit card debt during retirement can also quickly erode fixed incomes and retirement savings, potentially leading to a financial crisis when earning opportunities are limited.

And with today’s average credit card rates sitting at a record high of over 23%, it’s easier than ever for retirees to become trapped in a cycle of debt that could erode their financial security. Fortunately, there are ways to break free from this cycle — and there are several debt relief strategies worth considering to do so. But what are the best options for getting rid of expensive credit card debt during retirement?

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What are the best ways to get rid of credit card debt in retirement?

If you’re dealing with high-rate credit card debt in retirement, it may be worth considering the following strategies:

Enroll in a debt consolidation program through a debt relief company

Debt consolidation programs can be an excellent option for retirees struggling with multiple high-interest credit card balances. These programs, which are typically offered by debt relief companies, work by combining all outstanding credit card debts into one manageable loan via a loan secured through one of the debt relief company’s third-party lenders. This allows retirees to make a single monthly payment instead of managing multiple accounts.

But this method doesn’t just simplify payments; it can also reduce monthly expenses, as consolidation loans generally come with lower interest rates than credit cards. By working with a reputable debt relief agency, retirees also get the benefit of professional guidance through the debt consolidation process, which can make it easier to navigate. 

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Settle for less than what’s owed with a debt forgiveness program

Debt forgiveness (i.e. debt settlement) programs offer another targeted approach for retirees who are struggling with significant credit card debt. With debt forgiveness, a debt relief company negotiates with creditors to reduce the overall debt owed. This often results in a lump-sum payment to settle the debt for less than the full amount. For retirees, this can be a practical option to help eliminate high monthly payments.

It’s important to note, though, that debt forgiveness can impact credit scores, as it typically requires that you stop making payments to creditors while negotiations are underway. However, some retirees may find that the long-term benefits of settling high-interest debt outweigh the temporary effects on their credit. 

Get rid of interest charges temporarily with a balance transfer

For retirees with strong credit scores, a balance transfer credit card can offer a temporary respite from high-interest payments. These cards often feature an introductory period of 0% interest for 12 to 21 months (though the term varies by issuer and offer). By transferring their credit card balances to a single card, retirees can pay down their debt without accruing additional interest during the promotional period.

If you plan to take this route, just make sure to fully understand the terms of the offer, as the standard interest rate can be high once the promotional period ends. Retirees who can make substantial payments during the interest-free window may find this an effective strategy to reduce their debt, but they should plan carefully to avoid ending up with even higher interest charges down the line.

Use a HELOC to pay off high-rate credit card debt

For retirees who own their homes, a home equity line of credit (HELOC) can be a viable option to pay off credit card debt. HELOCs typically offer much lower interest rates than credit cards, as they use the home as collateral. By using a HELOC to pay off high-interest credit card balances, retirees can reduce their monthly interest costs and take advantage of longer repayment terms.

However, this approach does come with risks. Failure to repay a HELOC can jeopardize homeownership, which could have serious consequences for retirees relying on their home equity as part of their retirement plan. So before taking this route, just be sure to assess whether using home equity for debt relief is actually a suitable option for your situation.

The bottom line

Credit card debt can be a formidable obstacle during retirement, but debt relief strategies such as debt consolidation and debt forgiveness offer ways to manage and even eliminate these financial burdens. By carefully evaluating these options and consulting with reputable debt relief providers, retirees can choose the best path to reduce their debt and regain control of their finances. Whether through structured repayment or negotiated settlements, these approaches are designed to help retirees build a more secure financial future.