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Need help with your credit card debt? Start with your credit card company!

If you’re struggling to keep up with credit card bills, you’re not alone. According to a 2017 Bureau report, from 2015 to 2017 overall credit card debt increased by 13 percent, while people with very low credit scores saw their debt rise by 22 percent. 

Even if you’ve hit a rough spot, lost your job, are dealing with family illness, or facing emergencies, you still have options. The earlier you act on those options, the better your chances are for avoiding a debt in collections, damage to your credit report, a potential lawsuit or bankruptcy.   

Address your credit card debt with your credit card company

Contact your credit card company. When you think you might miss a credit card payment, or you already have, contact your credit card company as soon as possible. Many will work with you to find a repayment plan that suits your current situation. Once you’re late or miss a payment, you’re considered delinquent. If you don’t pay, the credit card company may block your ability to use your credit card and report the delinquency to the credit reporting companies. Generally, that delinquency can stay on your credit report for up to seven years. You could also face debt collection and be sued.

Find out what repayment options your credit card company offers. Credit card companies can, and often do, provide alternative repayment options. They depend on, among other factors, your income, how much you can afford to pay, and the amount you owe. They offer loss mitigation programs, sometimes called forbearance or hardship programs. Often these programs let you postpone a set number of monthly payments or pay a lower monthly payment at a reduced interest rate, until you repay the balance in full. If the credit card company determines that you cannot afford a full repayment plan within a certain timeframe, you might be able to negotiate to settle the debt for an amount lower than what you owe. This would depend upon the company’s policies and your account-specific circumstances. Remember to get written confirmation of any alternative repayment option to which you agree.  

Debt settlement companies are typically for-profit companies that often state that they can negotiate with your credit card company to reduce the amount you owe. Credit card companies generally do not have special offers available to only debt settlement firms, so you are paying the debt settlement company for work that you can do yourself. Typically, the debt settlement company will ask you to stop any payment and will ask you to stop communicating directly with your credit card company. Stopping payments might have a negative impact on your creditworthiness that you could avoid by working directly with the credit card company. Stopping payments could also result in a lawsuit being filed against you by the credit card company or a debt collector.  

Debt settlement companies charge fees–often 20 to 25 percent (or more) of the settled debt. You may face additional fees as well. You should carefully review all the terms and conditions of the debt settlement company’s fees and know your rights . For example, it’s illegal for companies that sell debt settlement and other debt relief services on the phone to charge a fee before settling your debt. 

Also, while credit card companies’ own loss mitigation policies are available to all eligible consumers, according to the 2017 Bureau report, often credit card companies will not work with debt settlement companies.

Comparing Costs: Debt settlement company vs. Credit card company

To better understand the difference between working directly with your credit card company and working with a debt settlement company, let’s take an example of a $10,000 credit card balance that is more than 120 days past due. This example assumes the credit card company would agree to a 60 percent settlement on a $10,000 debt, meaning you pay $6,000 plus any fees if you work with a debt settlement company.

Working with debt settlement company Working with your credit card company

You’ll generally pay about 20 percent (or more) of your balance in fees, or $2,000.

$10,000 debt owed

−$4,000 debt forgiven

You could settle this debt without any debt settlement fees.

$10,000 debt owed

−$4,000 debt forgiven


+$2,000 debt settlement fee


Total amount paid = $8,000

Money saved: $2,000

Total amount paid = $6,000

Money saved: $4,000

Another, less visible cost of working with a debt settlement company that has you stop payment on your debt is the potential negative impact to your creditworthiness. When you contract with a debt settlement company, your balance often is not negotiated down and settled right away. This also means that your balance could continue to grow with additional interest and late fees if you stop payments to the credit card company on the instructions of the debt settlement company. 

Working with a credit counselor

Depending on your situation, you may wish to contact a credit counselor. Credit counselors can help you manage your money, pay off your debt, and work with you to achieve your financial goals. They may have you make payments on your debt over a longer period, generally at a lower interest rate. They can also simplify the repayment process by allowing you to make one payment each month for all the loans you enroll in their debt management plan. There may be a fee for a debt management program.

Credit counseling agencies are usually nonprofit organizations, and you can find them through an internet search. To get started, you can try the Financial Counseling Association of America , or by phone at (800) 450-1794, or the National Foundation for Credit Counseling , or by phone at (800) 388-2227.

Sign up for our debt boot camp

Do you want to know how to create a budget? Have you ever tried tracking your spending? Are you interested in strategies for paying down your debt?

If any of these apply to you, or if you’re interested in finding new ways to meet your financial goals, our Get a Handle on Debt Boot Camp is for you.

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This blog post includes links and references to third-party resources or content that consumers may find helpful. The Bureau does not control or guarantee the accuracy of this third-party information. By listing these links and references, the Bureau in not endorsing and has not vetted these third-parties, the views they express, or the products or services they offer. Other entities and resources also may meet your needs.

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