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When credit card debt forgiveness is worth it (and when it’s not), according to experts
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Credit card debt is an all-too-common problem. Nearly half of credit card accounts in the US carry a balance from one month to the next, according to the Government Accountability Office. For those who find themselves in this situation, it can be difficult to climb out of this hole and get back to paying off your credit cards in full every month. Issues like high inflation squeezing budgets and high interest rates that are making debt more expensive have caused some Americans to feel like they can’t get out of the red.
When that happens, you might consider trying to obtain credit card debt forgiveness. Debt forgiveness can take shape in a few different ways, but it’s important to note that credit card debt forgiveness generally isn’t something that you can just call up a credit card company about.
“Rarely will a credit card company simply take less than they are owed just because a consumer asks them to do that. Rather, they are more likely to lower your interest rate, reduce fees, or offer a temporary period of lower monthly payments,” says Jordan Rippy, associate professor of accounting at the Johns Hopkins Carey Business School.
However, there can be ways to reduce the amount you owe, such as with the help of a third-party debt relief service that negotiates on your behalf or declaring bankruptcy. Doing so might save you money in the short term, but it can also be damaging to your credit, so it’s important to weigh the pros and cons.
Find out what your debt relief options are and get help today.
When credit card debt forgiveness is worth it (and when it’s not), according to experts
Here, we’ll examine some scenarios where credit card debt forgiveness could be worth it, as well as some times when there are likely better alternatives.
When credit card debt forgiveness is worth it, experts say
In certain cases, credit card debt forgiveness is worth it, like in situations where you’re in too big of a financial hole to climb out of it using other means.
“A debt forgiveness or debt reduction path is worth it when you have realized that the situation is out of control and you aren’t sure how to plot a path back to control,” says Rippy.
While this issue of control is subjective, you might consider your ability to make the minimum monthly payments due on your credit cards.
“If you aren’t able to make your monthly payments on all of your cards, that’s a big clue that your situation has gotten out of control. But, even if you are able to make your monthly payments, you will still be accumulating lots and lots of interest if all you can do is make monthly payments, so if you can’t really, truly see a path forward to paying off all of your credit card debt, seeking some outside help to understand your options is worth it,” adds Rippy.
And, while credit card debt forgiveness options can damage your credit for multiple years, it could be worth it when considering the alternatives.
“Negotiating a balance reduction and settling the debt is still a better option than defaulting altogether or not being able to pay any of your bills and causing greater chaos across your entire credit profile,” says Daniel Cohen, founding partner of Consumer Attorneys.
Compare your debt relief solutions online now.
When credit card debt forgiveness isn’t worth it, experts say
While credit card debt forgiveness can help you recover from difficult financial situations, it might not be worth damaging your credit for several years if you can instead find alternative debt help.
“Debt settlement isn’t worth it if you can reasonably afford to manage your financial situation in any other way. If just balance shifting or loan consolidation can do the trick, it’s not worth damaging your credit score with debt settlement,” says Cohen.
“The idea of not having to pay a sizable portion of your credit card debt can be enticing, but it shouldn’t be done hastily, treated lightly, or viewed as a get-out jail-free card,” he adds.
For one, you can hurt your credit to the point where it gets more expensive or impossible to get other loans for the following several years, such as for a car or home. You also run the risk of digging yourself into a deeper hole, such as if you’re using an ineffective credit card debt relief service that unsuccessfully tries to negotiate your debt while causing you to incur more late fees and interest.
To find a reputable debt relief company that can help find the best solution, be sure to see what others have to say.
“Read customer reviews. Learning from others’ experiences can often be helpful in this regard,” says Bob Welch, SVP, financial advisor at Wealth Enhancement Group.
The bottom line
Credit card debt forgiveness, such as through a debt relief company that negotiates on your behalf, or by filing for bankruptcy, could be the right solution for those significantly struggling to manage their debt. However, others who have more manageable situations benefit from other forms of debt relief, like debt consolidation or working out a repayment plan.
The following is a transcript of an interview with Sen. Mark Kelly, Democrat of Arizona, on “Face the Nation with Margaret Brennan” that aired on Oct. 6, 2024.
MARGARET BRENNAN: Joining us now is Arizona’s Democratic Senator, Mark Kelly. He’s in Detroit this morning on the campaign trail for the Harris campaign. Good morning to you, Senator.
SEN. MARK KELLY: Good morning, Margaret.
MARGARET BRENNAN: I want to talk to you about Arizona, but let’s start in Michigan, which is where you are right now. And it is going to be such a key state to a potential Harris or Trump victory. Vice President Harris is facing challenges among black men, working class people, as well as the Muslim and Arab populations skeptical of the White House support for Israel’s wars. What are you hearing on the ground there from voters?
SEN. KELLY: Well, my wife, Gabby Giffords, and I have been out here for a couple days. We’ve been campaigning across the country, Michigan, I’ve been in North Carolina, Georgia as well. I’ll be back to Arizona here soon. The vice president was out here speaking to Muslim organizations and the Arab community about what is at stake in this election and addressing the concerns that they have. What we’re hearing, issues about the economy, about gun violence, about, you know, supporting American families and the difference between Donald Trump and Kamala Harris. You know, Kamala Harris, who has a vision for the future of this country, Donald Trump, who just wants to drag us backwards.
MARGARET BRENNAN: Today in Dearborn, Michigan, there’s a funeral service for an American man who was killed in Lebanon by an Israeli airstrike. It just underscores how that community you’re talking about out in Michigan feel some of what’s happening in a personal way to their community. Given how close this race is, do you think this war and the expectation it could escalate could cost Democrats both a seat in the Senate and potentially the presidency?
SEN. KELLY: Margaret, nobody wants to see escalation and it’s tragic when any innocent person, whether it’s an American or Palestinian, lose their life in a conflict. Tomorrow’s one year since October 7th, when Israel was violently attacked. Israel has a right to defend itself, not only from Hamas, but from Hezbollah and from the Iranians. But, you know, I and my wife, you know, we feel for the community here who’s been affected by this. And that’s why the vice president was out here earlier, a few days ago, meeting with that community.
MARGARET BRENNAN: But it’s a live issue.
SEN. KELLY: Yeah, sure. I mean, there is an ongoing conflict in the Middle East. Israel is, you know, fighting a war now on, I think it’s fair to say, two fronts and then being attacked by the Iranians as well. And, they- they need to defend themselves, and we need to support our Israeli ally. At the same time, when women and children lose their life, innocent people in a conflict, it is- it is tragic.
MARGARET BRENNAN: You do sit on the Senate Intelligence Committee and so I know you know how intense the efforts are by foreign actors to try to manipulate voters going into November. Just this Friday, Matthew Olsen, the lead on election threats at the Department of Justice, told CBS the Russians are, quote, highlighting immigration as a wedge issue. That is such a key issue in Arizona. Are you seeing targeted information operations really focusing in on Arizonans right now?
SEN. KELLY: Not only in Arizona, in other battleground states. It’s the Russians, the Chinese, the Iranians, and it’s significant. And we need to do a better job getting the message out to the American people that there is a huge amount of misinformation. If you’re looking at stuff on Twitter, on TikTok, on Facebook, on Instagram, and it’s political in nature, and you may- might think that that person responding to that political article or who made that meme up is an American. It could be- it could look like a U.S. service member. There is a very reasonable chance I would put it in the 20 to 30% range, that the content you are seeing, the comments you are seeing, are coming from one of those three countries: Russia, Iran, China. We had a hearing recently, with the FBI director, the DNI, and the head of the National Security Agency. And we talked about this. And we talked about getting the word out. And it’s up to us, so thank you for asking me the question, because it’s up to us, the people who serve in Congress and the White House to get the information out there, that there is a tremendous amount of misinformation in this election, and it’s not going to stop on November 5th.
MARGARET BRENNAN: Understood. And we will do our best to help parse that for viewers. But on the topic of the border, President Biden did announce just this past week new regulations to keep in place that partial asylum ban that he rolled out back in June. That’s what’s credited with helping to bring down some of the border crossing numbers in recent weeks. It was supposed to be a temporary policy, dependent on how many people were crossing at a time. Do you think this is the right long term policy, or is this just a gimmick to bring down numbers ahead of the election?
SEN. KELLY: Well, the right long term policy is to do this through legislation. And we were a day or two away from doing that, passing strong border security legislation supported by the vice president, negotiated by the vice president, and the president and his Department of Homeland Security, with Democrats and Republicans–
MARGARET BRENNAN: But this is not legislation.
SEN. KELLY: –This is bipartisan. This isn’t. But the legislation was killed by Donald Trump. We were really close to getting it passed. That’s the correct way to do this. When you can’t do that, Margaret, when a former president interrupts the legislative process the way he did, which is the most hypocritical thing I’ve ever seen in my three and a half years in the Senate. After that happened, the only other option is executive actions. And this has gone from what was chaos and a crisis at our southern border to somewhat manageable. And if you’re the border- Border Patrol, you know, this is this- you need this. I mean, otherwise it is unsafe for Border Patrol agents, for CBP officers, for migrants, for communities in southern Arizona. So it’s unfortunate that this was the- these were the steps that had to be taken.
MARGARET BRENNAN: Okay.
SEN. KELLY: But that’s because the former president didn’t allow us to do this through legislation.
MARGARET BRENNAN: Senator, we have to leave it right there. Face the Nation will be right back.
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Sen. Mark Kelly says Americans need to know about “huge amount of misinformation” on election
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