High Credit Card Balances and Debt Settlement
In an ideal financial world for consumers, everyone would pay the full amount of debt they had charged during the previous cycle on their credit cards. Yet this is not how things generally work in practice, and it is not how credit card companies make money from consumers. According to Bankrate, nearly half of all Americans carry a credit card balance from month to month, and about 70 percent self-report that they expect to be able to pay off their credit card balances within a five-year period. As debtors carry credit card balances, their balances increase due to high interest rates and late fees. Making only the minimum payment on a credit card — particularly one with a high balance — can result in the balance increasing exponentially in the years to come.
According to a recent report in Marketplace, more Americans are carrying credit card balances than in years past and making late credit card payments, suggesting that debt problems are increasing. Could debt settlement be the right decision for you if you are in this situation?
Highest Balances and Late Payments Rates in Over a Decade
The data reported in Marketplace suggests that collective credit card balances and rates of late credit card payments are the highest they have been since this same time of year in 2012. Part of the reason may have to do with the COVID-19 pandemic and the shift in earning, spending, and debt forbearance agreements that occurred. As the report suggests, “both credit card delinquency rates and the share of accounts paying just the minimum payment has been rising over the past four years from pandemic lows, so this has been a slow-building trend.”
At the same time, data suggests that more people than ever are regularly using their credit cards for everyday expenses, rather than emergencies or “one-time big-ticket expenses,” which tends to result in more spending and less paying down of debt. The report cites a WalletHub analyst who says, “when the everyday expenses collide with the unexpected expenses, and you are running up those balances,” it becomes difficult “to even make the minimum payment” on credit card debt.
Considering Debt Settlement for Your Credit Card Debt
If you are among the many Americans who are in the growing situation discussed above, you may be wondering if debt settlement could be an option for you.
Generally speaking, credit card companies will be most likely to consider a debt settlement agreement when a debtor is already past due on payments. At this point, for the credit card company it is not clear if they will receive any money. Credit card companies also tend to be willing to consider a debt settlement offer if you are able to make a lump-sum payment rather than trying to negotiate a payment plan. Accordingly, if you are behind on payments and may be able to afford a lump-sum payment that covers a portion of what you owe, debt settlement may be able to get you out of debt.
Contact Our Georgia Debt Settlement Lawyers
If you have a significant amount of credit card debt and want to find out more about your options for getting out of debt, you should get in touch with one of the experienced Lilburn debt settlement attorneys at Konn Law Firm LLC. Depending on your circumstances, you may want to consider something like a debt consolidation loan, but at the same time, negotiating a debt settlement agreement with your credit card companies may be a way to get a fresh start after you make the lump-sum payment. To learn more, contact our firm today to discuss your situation.
Sources:
marketplace.org/story/2025/04/21/late-credit-card-payments-hit-record-high-philadelphia-fed-says
bankrate.com/credit-cards/news/credit-card-debt-report/#:~:text=48%25%20of%20credit%20cardholders%20report,their%20balance%20within%20five%20years
