Programs to Manage Credit Card Balances

If your credit card balances are growing and even the minimum payments are difficult to make, it's time to take a hard look at your finances and decide how you can dig your way out. Programs offered by reputable credit-counseling agencies and credit card issuers can help you to get your finances back on track and repay what you owe.

Credit Counseling

The first step in managing your credit card balances and rebuilding your financial life should be a session with a reputable nonprofit credit counselor (see Resources). A credit counselor can help you create a budget that allows you to see where your money is going and how much you have to pay toward each of your credit card balances. In addition, credit counseling agencies usually offer educational materials and classes that can help you to learn more about managing your finances and setting financial goals.

Credit Card Hardship Programs

When you've determined how much you have to pay toward each of your credit card balances, call your creditors to ask for help making your payments. Credit card companies often offer hardship programs, which give you temporary relief by lowering minimum payments, suspending payments and/or lowering or eliminating interest and fees.

Be prepared to offer evidence of your hardship. Before calling creditors, write down the circumstances that have resulted in your credit difficulty and stick to your script.

Debt Management Plans

If your credit card companies don't offer you forbearance for your high balances, or if you've exhausted these options, consider a debt management plan. Offered by credit counseling agencies, debt management plans help you to repay most or all of your debt within four to five years. Credit counseling agencies negotiate with your creditors to lower your payments and reduce or eliminate interest charges. Instead of making payments to your creditors every month, you pay the credit counseling agency, which, for a nominal fee, pays your creditors.

Credit Considerations

An important part of managing credit card balances is making a commitment to stop using credit. Ceasing use of credit is often a condition of both hardship programs offered by credit card companies and debt management plans. Although the cards affected by hardship programs and debt management plans are often suspended or closed, any attempts to get new credit can put your continued participation in these programs in jeopardy.