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The holidays are a time of celebration and connection, but for many, it also brings significant financial stress for many Americans. Indeed, the typical increase in expenses during the last months of the year can make it difficult to manage your budget, and if you are also dealing with high credit card debtKeeping your finances on track can be even more difficult this time of year.
If you’re feeling that kind of pressure right now, the good news is cancellation of credit card debt – also known as debt settlement – ​​can provide a lifeline. This approach to cancellation of credit card debt involves negotiating with your creditors to reduce the total amount you owe so that you can settle your debts for less than your current balance. While there are some potential disadvantages In light of this approach, this practical solution can provide great relief to those facing significant financial pressure due to high credit card interest charges.
While credit card debt forgiveness can be pursued at any time of the year, December may be a particularly opportune time to explore it this kind of debt forgiveness. Below we explain why.
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Three reasons to consider forgiving credit card debt this December
If you’ve been thinking about pursuing credit card debt forgiveness, here’s why December could be a good time to take action:
Credit card rates are at record highs
Credit card interest rates have recently skyrocketed an unprecedented average of more than 23%making it harder than ever to pay off balances. At this rate, with a balance of $8,000 average card debt that people now bear – would result in annual interest charges of more than $1,800 if you only make minimum payments. These rising costs mean that even small purchases can grow into overwhelming debt over time.
And while the Federal Reserve has recently adjusted interest rates, the last few rate cuts have been made by the Fed still need to provide relief for credit card users, because issuers tend to adjust rates more slowly. As a result, ticket rates are unlikely to drop from current record highs, at least not anytime soon. That means if you keep adding to your credit card debt, you could start to struggle pay off what you owe on your own.
Canceling credit card debt offers a possible solution to that problem by allowing you to do so negotiate discounts on your principal balances and avoid crippling interest costs. By following this option in December, you can relieve the pressure of excessive interest over time and start working toward financial freedom.
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Dependence on credit cards is growing
Economic challenges, including the current high costs of essentials such as housing and groceries as a result of years of high inflationhave also led to increased dependence on credit cards. Many households now turn to credit to bridge the gap between income and expenditure, causing balances to rise. For example, the total amount of credit card debt increased from $1.14 trillion in the second quarter of 2024 to $1.17 trillion in the third quarter of 2024a clear indicator of this increased reliance on short-term borrowing.
If you find yourself in a similar situation, it is crucial to address the problem before it gets worse. After all, it doesn’t take much for high interest on your credit card debt to cause your debt to spiral out of control – and the more your debt load grows, the harder it is to get rid of. That’s true credit card debt forgiveness is coming in. This form of debt relief provides a way to break out of this cycle by reducing the amount you owe. And if you take action now, before additional holiday expenses or other unforeseen expenses, you can prevent the problem from worsening further.
The new year is on the horizon
There is something symbolic and empowering about starting the new year with a clean slate. January is often associated with new beginnings, making December the perfect time to get started tackling financial challenges and prepare yourself for success. By starting the debt forgiveness process now, you can enter the new year with a clear plan to tackle your remaining obligations.
Debt forgiveness programs typically take some time to negotiate and finalize, so starting the process in December will ensure you’re well-positioned for progress come January. Instead of carrying the stress and burden of credit card debt with you for another year, focus on… achieving financial goalssuch as building savings or improving your credit score. Taking action now can transform your financial outlook and help you approach the new year with confidence.
The bottom line
Credit card debt can feel overwhelming, especially now that interest rates are at record highs and financial pressures are mounting. However, this December offers an ideal opportunity to take action. By tackling your debt now, you can avoid the compounding effects of high interest charges, relieve financial stress, and set yourself up for a stronger financial future. While the process requires careful consideration and a commitment to resolving your debt, the potential benefits for most cardholders – such as lower balances and more manageable payments – are well worth the effort.
