If you're feeling overwhelmed by your credit card balance, there are a few debt relief options that can help – including debt settlement. This can involve a company negotiating payment terms that are affordable for you so that you can settle the debt with your credit card provider (or other creditors).
But companies that offer debt settlement can charge fees for this service. So, if you want to tackle your debt without paying a company to help, let's take a look at some of your options.
Need help now? Call the National Debt Helpline for free support
If you're struggling with credit card debt, other debts or bills and are not sure what to do, you can get free and confidential advice from a professional financial counsellor by calling 1800 007 007 between 9.30 am and 4.30 pm, Monday to Friday.
A debt settlement company works on your behalf to help you settle outstanding debt by looking at your financial situation and offering different solutions. Some options include:
- Budgeting advice and tips to help you manage your money
- Credit repair services
Some of these options, such as debt agreements, can only be filed by a registered practitioner but there are usually fees. Make sure you ask about the debt solutions company about the costs first so that you can decide whether it's affordable.
Remember, there are other ways to deal with credit card debt – including on your own terms. And if you need support or free advice at any stage, call the National Debt Helpline on 1800 007 007.
1. Contact your credit card provider's financial hardship department
Banks and credit card providers have dedicated financial hardship teams that can help you find ways to settle your credit card debt. Just call your provider and let them know you are experiencing financial hardship.
They will ask about your circumstances and suggest some options for dealing with the debt.
2. Negotiate a payment plan
Let your credit card provider know what your financial obligations are and what type of payment plan would be affordable for you.
Some options could include reduced repayment amounts over a longer period of time, waived fees or charges, restructuring or consolidating debts or even freezing the account.
3. Draw up a budget
Create a budget to help make sure you meet the new repayment plan. This could also be an opportunity to see if there are any areas of your spending that you can cut back on – at least until the debt is settled.
4. Repay your debt
Pay the amount necessary to settle your debt. If you have any more concerns during this time, contact the financial hardship team again and let them know. Remember you can get free support at any stage by calling the National Debt Helpline on 1800 007 007.
"How I paid off $185,000 of credit card debt in 5 years"
Depending on the amount of debt and your circumstances, some of the other options you could consider include:
Balance transfer credit cards
A balance transfer credit card offers an introductory 0% p.a. interest rate for a set period of time, such as the first 12 months, when you move your existing debt to the new account. This can temporarily help you pay a larger amount of debt off your card because there are no interest charges. However, if you have a large debt (or debts), you may not be able to move it all to a new card.
If you're juggling multiple debts, this type of personal loan gives you a way to move them onto a single account. This means that you will only have to make one repayment and deal with one set of fees, which can make managing the debt more straightforward.
There are support services in Australia that you can access for free, including the National Debt Helpline's financial counselling service (1800 007 007) and financial support teams at The Salvation Army and Mission Australia. Finder's guide on getting financial help goes through your options.
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