The holiday season is a time for celebration and connection, but for many, it also comes with significant financial stress for many Americans. After all, the typical uptick in spending that occurs during the final months of the year can make it tough to manage your budget, and if you’re also dealing with high-rate credit card debt, keeping your finances on track can be even more difficult during this time of the year. 

If you’re feeling that type of pressure right now, the good news is that credit card debt forgiveness — also known as debt settlement — may offer a lifeline. This approach to credit card debt relief involves negotiating with your creditors to reduce the total amount you owe, allowing you to settle your debts for less than your current balance. While there are some potential downsides to this approach, this practical solution can offer big relief for those facing significant financial strain from high credit card interest charges.

While credit card debt forgiveness can be pursued year-round, December may be an especially fitting time to explore this type of debt forgiveness. Below, we’ll explain why.

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3 reasons to consider credit card debt forgiveness this December

If you’ve been thinking about pursuing credit card debt forgiveness, here’s why this December could be an opportune time to act:

Credit card rates are sitting at record highs

Credit card interest rates recently surged to an unprecedented average of over 23%, making it harder than ever to pay down balances. At this rate, having a balance of $8,000 — the average amount of card debt people are carrying right now — would result in annual interest charges exceeding $1,800 if you only make minimum payments. This escalating cost means that even small purchases can snowball into overwhelming debt over time.

And, while the Federal Reserve has made adjustments to interest rates recently, the last couple of Fed rate drops have yet to provide relief for credit card users, as issuers typically adjust rates more slowly. As a result, it’s unlikely that card rates will drop from today’s record highs, at least not anytime soon. That means if you let your credit card debt continue to compound, you could have a tough time paying off what you owe on your own. 

Credit card debt forgiveness offers a potential solution to that issue by allowing you to negotiate reductions on your principal balances and sidestep crippling interest charges. By pursuing this option this December, you can alleviate the strain of excessive interest over time and start working toward financial freedom.

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Credit card reliance is growing

Economic challenges, including the current high costs of essentials like housing and groceries due to years of high inflation, have also led to increased reliance on credit cards. Many households are now using credit to bridge the gap between income and expenses, causing balances to rise. For example, the total amount of credit card debt increased from $1.14 trillion in the second quarter of 2024 to $1.17 trillion in Q3 2024, a clear indicator of this increased reliance on short-term borrowing.

If you find yourself in a similar situation, it’s crucial to address the problem before it gets worse. After all, it doesn’t take much for the high interest rates on your credit card debt to cause your debt to spiral out of control — and the higher your debt burden grows, the harder it is to get rid of it. That’s where credit card debt forgiveness comes in. This type of debt relief offers a way to break free from this cycle by reducing the amount you owe. And acting now, before additional holiday spending or other unforeseen expenses, can help prevent the problem from compounding further.

The new year is on the horizon

There’s something symbolic and empowering about starting the new year with a clean slate. January is often associated with fresh beginnings, making December the perfect time to start addressing financial challenges and setting yourself up for success. By starting the process of debt forgiveness now, you can enter the new year with a clear plan to tackle your remaining obligations.

Debt forgiveness programs typically take some time to negotiate and finalize, so initiating the process in December ensures you’re well-positioned for progress by January. Instead of carrying the stress and burden of credit card debt into another year, you can focus on achieving financial goals, like building savings or improving your credit score. Taking action now can transform your financial outlook and help you embrace the new year with confidence.

The bottom line

Credit card debt can feel overwhelming, especially now that interest rates are at record highs and financial pressures are mounting. This December, however, presents an ideal opportunity to take action. By addressing your debt now, you can avoid the compounding effects of high-interest charges, alleviate financial stress and set yourself up for a stronger financial future. While the process requires careful consideration and a commitment to resolving your debt, for most cardholders, the potential benefits — like reduced balances and more manageable payments — are well worth the effort.