Despite the Federal Reserve’s 50 basis point rate cut last week, credit card rates are still hovering at record highs. Right now, the average credit card rate is sitting at nearly 23%, putting significant pressure on cardholders who are carrying balances. And while the Fed’s rate reduction may eventually lead to lower credit card rates, the immediate landscape remains challenging for cardholders, as those with outstanding balances run the risk of their debt growing rapidly due to today’s high rates.

But while credit card rates are high across the board, store credit cards are particularly expensive options today. These cards, often marketed as a way to save on in-store purchases or earn exclusive rewards, come with some of the highest interest rates on the market. For example, the average retail card rate currently exceeds 30%, which means store card users who are carrying a balance are at an even greater risk of having their card debt spiral out of control. 

If you’re overwhelmed by your store credit card debt, debt forgiveness can seem like a lifeline. With credit card debt forgiveness, the goal is to negotiate with your card issuers to get them to accept a lump-sum settlement that’s lower than what you currently owe. That can greatly reduce your debt, but can this approach be applied to retail and store credit card debt? That’s what we’ll break down below.

Ready to get rid of your high-rate card debt? Explore your top debt relief options here.

Can my store credit card debt be forgiven?

The short answer is yes — store credit card debt can be forgiven, but the process isn’t always as simple as calling up your card issuer and requesting relief. This type of forgiveness typically comes through a process called debt settlement. With debt settlement, you, or more commonly, a debt relief company you work with, negotiate with the credit card company to settle the debt for less than the full balance owed in return for a lump sum payment.

In a successful settlement, you may be able to reduce your store card balance by 30% to 50%, allowing you to walk away from a portion of the debt. However, it’s important to note that debt forgiveness is not guaranteed. Credit card issuers, including those that offer store credit cards, are under no obligation to settle a debt, and some may outright refuse. That said, many issuers are open to settlements, especially if they believe the alternative is that you’ll default and they won’t be able to collect any money on what you owe.

That, in turn, can provide significant relief from your card debt. However, there are risks involved in pursuing debt forgiveness. For starters, successfully negotiating a lower balance typically requires you to stop making payments on your card. This means that during the negotiation period, your credit score may take a significant hit as your account becomes delinquent. 

Any forgiven amount may also be considered taxable income by the IRS. That means you could owe taxes on the difference between what you originally owed and what you ultimately paid — so it’s important to do the math and make sure you’ll truly save by having your debt forgiven before pursuing this option.

Learn how the right debt relief strategy could help you get out of debt faster.

Other debt relief options that could help

If you’re struggling to manage your store credit card debt but aren’t sure if debt settlement is the right path, there are other debt relief strategies to consider, including

Debt management

When you enroll in a debt management program, the credit counseling agency you work with can help you create a budget, negotiate lower interest rates with your credit card companies and develop a plan to pay off what you owe over a set period. While this approach doesn’t involve forgiveness or settling your debt for less than you owe, it can make your monthly payments more manageable and help you get out of debt faster. It’s also less damaging to your credit score.

Balance transfer

If your credit score is still relatively good despite carrying a balance on your store card, a balance transfer card could be a valuable tool. Many balance transfer credit cards offer a 0% introductory APR for a set period, often between 12 and 18 months. By transferring your store credit card balance to one of these cards, you can buy yourself some time to pay down your debt without accruing more interest.

Debt consolidation

Another option is to consolidate your store card debt with a debt consolidation loan. Many lenders offer these types of loans with lower interest rates than those found on retail credit cards. By consolidating your debt into a single loan, you may be able to reduce your monthly payments and save on interest over time. Plus, debt consolidation loans have fixed terms, meaning you’ll know exactly when your debt will be paid off.

The bottom line

While store credit card debt can be forgiven through debt settlement, it’s not a guaranteed solution, and there are risks involved. Luckily, there are several other debt relief options available, from credit counseling and balance transfers to debt consolidation loans, so if debt forgiveness isn’t the right move, you may have alternate routes to take. If you find yourself struggling with store credit card debt, it’s important to explore all your options and choose the one that best fits your financial situation.