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Credit card debt settlement: how to do it yourself

Step 1 is to contact your bank or credit card company and let them know you're experiencing financial hardship.

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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.

What is a debt settlement company?

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.

4 steps to settle credit card debt on your own

smiley and phone icon1. 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.

hands shaking and a floating coin2. 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.

calculator, paper, and money3. 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.

bomb with a dollar sign4. 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"

Other ways to deal with credit card debt

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.

  • Debt consolidation loans

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.

  • Free financial help

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.

Compare balance transfer credit cards

1 - 10 of 30
$
% p.a.
Name Product Balance transfer rate p.a. Purchase rate p.a. Annual fee Amount saved
Citi Clear Card - Balance Transfer Offer
0% for 36 months
14.99%
$49 for the first year ($99 thereafter)
Offers 0% p.a. on balance transfers for 36 months with no balance transfer fee. Plus, a first-year annual fee discount and complimentary insurance covers.
Kogan Money Black Card - Exclusive Offer
0% for 30 months
20.99%
$0
Save with a $0 annual fee and a 0% introductory rate on balance transfers. Plus, earn $30 Kogan.com Credit and uncapped rewards points.
HSBC Platinum Credit Card
0% for 36 months
19.99%
$29 for the first year ($129 thereafter)
Save money with a 0% balance transfer rate for 36 months (with no BT fee), a first-year annual fee discount and free travel insurance.
Coles Low Rate Mastercard
0% for 36 months
12.99%
$58
Enjoy 0% p.a. on balance transfers for the first 36 months (with no balance transfer fee).
St.George Vertigo Card
0% for 32 months
13.99%
$0 for the first year ($55 thereafter)
Get a 0% interest rate on balance transfers for 32 months (with no balance transfer fee) and a $0 annual fee for the first year.
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
0% for 28 months
20.74%
$0 for the first year ($129 thereafter)
Get 0% p.a. on balance transfers for 28 months (with no BT fee). Plus, $0 annual fee in the first year.
Coles No Annual Fee Mastercard
0% for 12 months
19.99%
$0
Get 20,000 bonus Flybuys points when you spend $3,000 on eligible purchases in the first 90 days. Plus, an ongoing $0 annual fee.
Virgin Money No Annual Fee Credit Card
0% for 12 months
0% for 12 months, reverts to 18.99%
$0
Save with a $0 annual fee and 0% p.a. on balance transfers and purchases for 12 months.
Citi Rewards Card - Purchase and Balance Transfer Offer
0% for 14 months
0% for 14 months, reverts to 21.49%
$0 for the first year ($149 thereafter)
Save with 0% on purchases and balance transfers for 14 months with no balance transfer fee. Plus, $0 first-year annual fee.
NAB Low Rate Credit Card
0% for 32 months
12.99%
$0 for the first year ($59 thereafter)
Get a 0% interest rate on balance transfers for the first 32 months (with no BT fee). Plus, save with a $0 first-year annual fee.
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6 Responses

  1. Default Gravatar
    JayMarch 18, 2018

    I am drowning in CC debt. Having companies constantly contacting me. What can I do? I have read all about ‘offering’ to repay a percentage is this possible?

    • Default Gravatar
      AshMarch 23, 2018

      Hi Jay,

      Thank you for reaching out to us.

      You may settle your credit card debts in different ways which will depend on your financial capability. See the options that you may take in settling your credit card balance.

      • You may arrange a negotiation with your credit card company wherein you do not necessarily need to pay all your balance owing but both parties will reach a mutual agreement. You may refer to our guide above on how you can negotiate a suitable payment agreement.
      • Applying for a 0% balance transfer credit card so you can focus on paying your debt other than having the interest adds up. Please use our comparison table to help you find the card that suits you. Keep in mind that you may check first the eligibility requirements of the banks before acquiring it.
      • You may consolidate your debt with a personal loan. You may apply for a loan with as low as 7.5% interest rate.

      Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you. You can also contact the provider if you have specific questions.

      I hope this helps.

      Please do not hesitate to reach out to us again if you have additional questions.

      Cheers,
      Ash

  2. Default Gravatar
    MollyJuly 7, 2017

    Hi, We have 3 credit cards and about 18 months ago we contacted one of those dept help assist companies to deal on our behalf to claim financial hardship and so basically that was all good interest was frozen and we made minimal repayments, however not so long ago this dept help company has gone into receivership and we were stuck. I then contact the banks directly and we negotiated for another 6 months which is great. Basically in a few weeks we will have enough money pay them out however we were told that you can make them an offer to settle the debt and one of them have accepted around 20% off what is owing $13500 Now my question is what is recorded on the Credit File, will they listed at Default or as settled now sure where to call and ask.

    • Default Gravatar
      JonathanJuly 11, 2017

      Hello Molly!

      Thanks for the inquiry! We know you’re working hard to get this all taken cared of. :)

      Debt settlement companies may declare “paid”, “settled” or “paid as agreed” on your credit file, depending on their internal procedure and differentiation. We recommend that you consult with your settlement company to verify which one they put on the file of their customers who are paying less than the actual balance.

      Hope this helps.

      Cheers,
      Jonathan

  3. Default Gravatar
    DarrenAugust 25, 2014

    If I have a credit card debt of $35k with a bank, but also have a property valued at $500k and a loan with them of $335k, can the bank do anything with the property I have if I stop paying the credit card off?

    • Avatarfinder Customer Care
      ShirleyAugust 27, 2014Staff

      Hi Darren,

      Thanks for your question.

      Please check the product disclosure statement of your credit card, under the financial hardship section. It should state what the course of action is if your financial commitments can not be met.

      In most cases, your debt is transferred to a debt collector, and new payment terms can be made.

      Cheers,
      Shirley

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