Credit Card Debt Relief Pros and Cons

A credit card is an opportunity given by various lenders to achieve multiple goals and objectives. A credit card is a money borrowing method where you can access some money and repay later with a specific interest.

However, credit cards can also create a financial burden for many Americans. If you are similarly struggling with meeting your monthly payment on your credit card, worry no more as you have various debt relief ideas.

But, what are the credit card debt relief pros and cons?


 Debt consolidation

You may find yourself striving to make payments for different debts and other bills together. For these reasons, the lenders have provided you with an option to roll your multiple debts into one debt. Below are some of the pros and cons of such relief.


 Debt Consolidation Pros

  • Lower the amount of debt to pay per month

With debt consolidation, you will have the opportunity to make a lower debt repayment amount. Debt consolidation is a plus to you, as you will easily cater to other bills without much struggle. With such relief, you will save and invest for the future.

  • Pay off debt with little interest.

If you were financially affected by the Covid-19 pandemic, certain debt consolidation options will help you pay off some of your credit card debt with little or no interest.

  • Improve your credit score

Having multiple credit card debts unpaid or late payments may negatively affect your credit score. However, with debt consolidation, your credit score may improve. An improved credit score is possible since paying off some loans that could affect your score will be a plus.


 Debt Consolidation Cons

  • Lower your credit score

Debt consolidation involves the opening of a new account. You may leave some credit cards with some debt, which could pile up into a vast amount. If unpaid, it may negatively affect your credit score.

  • No guarantee for best interest rates

Debt consolidation involves a lot of calculations. You may find that your credit card debt consolidation has no impact on your interest rate. In addition, to no gain in interest rate, your score may be negatively affected. Therefore, debt consolidation may result in significant loss to you.

  • High transfer fee

To consolidate your debts into one account, you will have to pay a transfer fee. The higher cost could mean you may not have found the solution to the debt payment struggles.


Debt Settlement

If you have a debt and struggle to make monthly payments, worry no more as you can agree with the lender to pay less than the actual balance. However, the agreement may have pros and cons; check them out.


Debt Settlement Pros

  • Save Money

If you make the payment as agreed with the lender, you will have saved some cash. You can quickly pay for other bills, save or even invest with the saved money. You can learn more from Freedom Debt Relief about debt settlement.


Debt SettlementCons

  • Lower credit score

Credit card debt forgiveness may encourage delinquency. Delinquency may decrease your credit score by 100 points. You can borrow the available amount of credit with a lower credit score.

  • High Settlement fee

The debt settlement company may charge you between 15-25% of the amount of debt for debt settlement. The fee makes it expensive, especially if you struggle with monthly debt repayment.



Upon passing the means test, the lender can legally forgive your debt. Bankruptcy is a better debt relief option, especially for those affected by the COVID 19 pandemic. However, like any other relief, Bankruptcy has pros and cons, as discussed below;


Bankruptcy Pros

  • It’s a feasible way to get out of debt

Bankruptcy is a legal process where you have to follow specific procedures. Before filing for chapters 7 or 13 bankruptcy protection, you are required to complete a pre-bankruptcy credit counseling session. You will be issued a certificate if you truly meet the bankruptcy requirement. With the certificate, you can now file for Bankruptcy, which can be approved upon completing pre-discharge debtor education.

  • Offer financial education

Within the bankruptcy application process, you must also complete pre-discharge debtor education. Financial education is a plus for a better future financial plan. You will be enlightened more on other better debt settlement plans than Bankruptcy.


Bankruptcy Cons

  • Negative Credit score

A chapter 7, bankruptcy remains on your credit report for ten years, while a chapter 13 bankruptcy remains for seven years.

  • Asset loss

For your credit to be discharged, you are required to allow the federal court trustee to supervise the sales of your assets. The money from the asset sale is used to help pay your credit card debt.

  • Court costs and attorney fees

Bankruptcy is a long process that involves lawyers and court processes. Thus, you will be required to pay the lawyers for all kinds of help, whether your request for bankruptcy protection goes through or not.


Debt Management Plan (DMP)

An additional option for debt relief is a debt management plan. The option requires you to be making one monthly payment to a credit counseling organization. Upon payment, the organization distributes the costs to the creditors.


Debt Management Pros

  • You make one payment

Credit counseling agencies distribute payment to different creditors. With DMP, you no longer struggle with the complex calendar and late payment stress.

  • Secure lower interest Rate

An additional benefit of a debt management plan is that a credit counselor will try to negotiate a lower interest rate on your behalf. You may be entitled to lower monthly payments with a lower interest rate.

  • Increased Credit score over time

The debt management plan will enable you to make consistent payments on time. A constant amount will attract a positive credit score.

  • DMP Provide educational resources

In addition to helping you distribute payments to different creditors, credit counseling agencies may provide you with educational resources. The materials allow you to plan your debt to avoid such struggles in the future.


Debt Management Cons

  • Requires you to close your credit card accounts

To benefit from the Debt management plan, you may be required to close the credit card accounts involved in the program. This ensures you don’t take on more debt while paying the current ones. In addition, the creditor will monitor your spending and ask you to close your credit card if they discover you have taken on new debt after enrolling.

  • Not all creditors participate.

Although the plan has a lot of benefits, some creditors may deny the offer. In addition, some may accept the project but don’t accept a lower interest rate.

  • You must make a consistent monthly payment.

The credit counseling agencies will require you to be paying your debt consistently. Failure to do as agreed may deny you all the benefits involved in DMP.


Bottom Line

If you struggle with paying your debt, you can check the above credit card debt relief pros and cons. The post explains the various debt relief options you can select. However, before choosing either of the above options, go through their pros and cons to make the right decision. The article will also help you choose the right agency to help you pay off your debt with ease.

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