Credit card debt is an unfortunate reality for many today. Americans owe over $1 trillion in credit card debt, according to recent data from the Federal Reserve Bank of New York. And with steep interest rates and a high cost of living, the end of the road with debt can seem far away.
If you’ve been attacking debt with little progress, some small strategic steps can potentially shorten the journey.
Here’s what you can do to start digging your way out.
Understand your goals — and get motivated
Get clear on why you want to tackle debt and the opportunities that open up without it, says Gabbi Cerezo, a certified financial planner and accredited financial counselor.
Write down the reason and post it somewhere visible as a daily reminder, she says. It can also help to tape a note to your credit card, too.
Before diving right into the numbers — what you owe, and to whom — Cerezo also recommends looking to social media for inspiration.
“By getting familiar with how other people have overcome the burden of credit card debt and seeing all the methods that there are out there, it starts to become more of a possibility in your mind,” she says.
Be sure to watch out for misinformation online, even from those who have successfully paid off debt. If a strategy catches your eye, research it across reputable personal finance websites to get the experts’ take on it.
Once you’ve got a healthy dose of inspiration, refer to your credit card statements to tally up debt, interest rates and the monthly costs.
Explore options to lower interest rates
Now that you have a goal and some numbers on paper, you can start to comparison shop for low-interest options. Depending on your credit, some of those options may include:
Negotiating a lower interest rate. With a good payment history and promotional mail offers as leverage, call credit card issuers to see whether you might qualify for a reduction.
Using a balance transfer credit card. You can accelerate progress by transferring high-interest debt onto a new credit card with no annual fee and a 0% introductory APR. Look for one with a balance transfer fee of 3% or lower.
Getting a personal loan. A balance transfer credit card comes with its own credit limit, which may not be enough to handle all of your debt. In that case, a personal loan can make sense. It allows you to consolidate debts into one lower-interest fixed payment.
Creating a debt management plan. Regardless of your credit, if payments or everyday costs are becoming difficult to manage, consider consulting an expert at a nonprofit credit counseling agency. That expert can determine whether you qualify for a debt management plan that consolidates credit card debt into one single payment with a lower interest rate.
Many of these options have costs or fees attached, so calculate whether they’re cheaper than the interest you’ll otherwise pay over time on your debt. To make more of an impact, stop using credit cards and, if possible, pay more than the minimum amount due each month.
Nicole Reed, a senior budget analyst and content creator based in Virginia, used two 0% APR balance transfer credit cards to pay off around $31,000 in credit card debt in 2023.
“I sat down with those minimum balances that those cards had established and I knew I wanted to pay more,” she says.
By also applying windfalls like tax refunds, bonuses and additional income, she reached her debt-payoff goal in nine months.
Make smart money moves
Look through debit and credit card statements and eliminate unnecessary expenses, and switch to cheaper alternatives. Reed, for instance, cut back on coffee, dining out and traveling.
“You have to prioritize what’s more important to you,” she says. “Would you rather get out of the debt or would you rather have that thing?”
If you’ve exhausted these options and there still isn’t enough money to go around, consider a larger change that can supplement your income or help it go further: adding a roommate, searching for a new job, taking on a side hustle or seeking a raise.
Resolve to put any savings from your revamped budget toward the debt, an emergency fund or both. A small emergency fund can keep you from falling further into debt when an unexpected expense arises.
Work your way up to saving your first $1,000, Cerezo says. It’s hard to do, but it can prevent reliance on credit cards if money runs out, she says.
Choose your target
With multiple credit cards, all payments must be met — but you can determine which debt to prioritize. The avalanche method is the most cost-effective, as you’ll tackle the debt with the highest interest rates first. But the snowball method — in which you attack smaller debt amounts first — may work better for those seeking immediate motivation.
Set a deadline
Unless you’ve been assigned a deadline through newly negotiated terms (see above), do the math to determine how much you’ll need to pay each month to eliminate your debt.
Plan to celebrate milestones along the way with an experience or prize that won’t break the bank, Cerezo says.
Tracking progress visually can also help you stay connected to goals, and scheduling regular check-ins with your budget can offer a realistic view of any advancement or setbacks.
Entering the holiday season with high-interest debt or financial struggles can put you at risk for a debt hangover that could linger for years.
It’s a crossroads that many will unfortunately encounter this holiday season. Credit card balances rose to over $1 trillion in the second quarter of 2023, according to a report by the Federal Reserve Bank of New York. The average rate for credit cards assessed interest as of August 2023 was 22.77%, according to data by the Federal Reserve. Compared with previous years, that rate is alarmingly high.
With interest rates sky-high, this is one of the worst times to charge expenses to credit cards that you can’t pay off quickly. Before you shop for the holidays, consider these ways to help you get clear on your goals and protect your finances.
1. Find a way to lower high-interest debt
If you’re already carrying debt, consider ways to save money on interest. Depending on your credit, some options may include:
A 0% introductory APR balance transfer credit card: This card lets you move debt onto it from a different account to get the lower interest rate. The ideal card has no annual fee and a balance transfer fee of 3% or lower. Compare the cost of the fee with the projected interest payments on your current card to determine if it’s worth paying.
A personal loan: For multiple debt balances, a personal loan that consolidates debts into a single low-interest fixed payment can simplify your finances.
A debt management plan: If you’re struggling to keep up with bills, a counselor at an accredited nonprofit credit counseling agency can determine your eligibility for a debt management plan that consolidates balances into a single low-interest fixed payment, for a fee. A lower interest rate is possible because these organizations have relationships with creditors, says Madison Block, a product marketing manager at American Consumer Credit Counseling.
Also explore your budget for opportunities to save, removing unnecessary expenses and swapping others for less costly alternatives. Then put any savings toward your debt, and contribute enough money each month to pay it down by the desired deadline. Commit to prioritizing your debt over the holiday season and tailor your purchases to facilitate that goal.
2. Create a holiday list
Building holiday spending into your year-round budget is a good way to prepare for seasonal expenses. But even if you know how much you have to spend, holiday shopping can overstuff your budget quickly if you’re not careful. One simple but powerful tool can help. Make a list and use the amount you have available to determine how much to spend on gifts, decorations, food, travel and any other holiday purchases.
Every Christmas, Lizbet Barajas, a Texas resident, sticks to a holiday list of expenses to stay on track with her goal to pay down student loan debt. With her husband, she budgets for gifts year-round for two kids, ages 3 and 6, and both sides of their family.
“Having that list early on makes it easier to know exactly what I’m buying them without having to do last-minute shopping, which then causes you to overspend,” says Barajas, a content creator of the YouTube channel Lizbet Talks Money.
Robyn Goldfarb, a Florida resident and blogger at A Dime Saved, also budgets year-round for Hanukkah to avoid taking on debt. With her husband, she budgets $50 per gift for their three kids, ages 2 to 10, and she only gives gifts on one of the eight nights of Hanukkah.
“One night we’ll do donuts, one night we’ll do cookies, so there’s something exciting happening every night, but it’s not necessarily a gift or something expensive,” she says.
3. Explore money-saving alternatives
Consider which expenses are negotiable and which aren’t. If necessary, stretch your dollars by changing expectations with friends and family this year. With prices still high due to inflation, they might welcome a more budget-friendly option, like a potluck, a secret gift exchange, gifts for kids only or a price limit for gifts.
Supplementing your income over the holiday season can also help you avoid debt for those must-have purchases.
“One thing people can do is potentially take on a seasonal part-time job or a side hustle,” Block says. “If you have some unused items or old furniture or things around your house that you aren’t even using, selling that on Facebook Marketplace or Craigslist could be potentially a good way to get a little bit of extra cash for the holiday season.”
Creativity can also lead to savings. It’s how Goldfarb saves on decorations.
“I’ll have my kids make things and I save them from year to year,” Goldfarb says. “There are so many ideas online.”
4. Set guardrails to stick to your budget
Switching your payment method temporarily to debit or cash can protect finances from debt. In previous holiday seasons, Barajas used a version of the cash envelope system to stay on track. By having an envelope with a fixed amount of money for every categorized holiday expense, like gifts, meals and travel, you can prevent overspending.
“It’s more visual,” Barajas says.
5. Look for deals
Scavenge for the best deals. Using browser extensions or apps, like Honey, Flipp or CouponCabin, may help you find coupons or potential savings on different items. Some large retailers such as Amazon, Walmart and Best Buy also have online outlets and open-box deals that may offer items at lower costs. Compare prices to know if it’s a good deal.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
By 2028, women are projected to own 75 percent of discretionary spending in the United States. [Nielsen]
Considering women make up 51 percent of the U.S. population, female consumer trends have a strong influence on the economy. Collectively they make up a sizable growth market that can’t be ignored.
Women are increasingly invested in the quality of the items they buy and how well they fit their lifestyle. Since they’re more likely to shoulder the responsibility for things like household purchases, grocery shopping and meal preparation, convenience is a high priority in women’s spending habits and something they seek out in their everyday lives.
Businesses that fail to understand the unique characteristics of female consumers are ultimately losing out on a valuable market. Greater effort will be required to keep up with the evolving consumer landscape that is driven largely by women. By analyzing the statistics associated with women’s spending habits, we can gain insight into their preferences, values and thought processes when it comes to what and how they buy. Read on to learn more.
Note: We reference the most updated data available, but sometimes that information is from several years ago—check each individual source for specifics.
Table of contents:
An overview of female consumer trends
The impact of female consumerism in the U.S. is hard to understate, as they make the majority of all consumer purchases. This could be attributed to the fact that women often buy not only for themselves but also for their families and children.
With women leading the majority of household purchases, retailers could benefit from focusing on how they can best serve the vast number of female consumers who stimulate their sales year after year.
By 2028, women are projected to own 75 percent of discretionary spending in the United States. [Source: Nielsen]
Women make 91 percent of new home purchases. [Source: Girlpower Marketing]
An average of 89 percent of women across the world reported controlling or sharing daily shopping needs, household chores and food prep compared to an average of approximately 41 percent of men. [Source: Nielsen]
Women are the primary purchasers of everyday household items. [Source: Nielsen]
61 percent of women in the U.S. believe that they are worse off or about the same compared with five years ago when it comes to finances. [Source: Nielsen]
67 percent of women in 2019 were employed for pay. [Source: Civic Science]
Men’s vs. women’s spending habits
There are often notable differences between the minds of men and women, including what motivates them when it comes to their spending habits. While neither gender can be placed in a box and a broad range of characteristics exist for each, there are general patterns that can shed light on their financial lives and choices.
The answer to the question “Do women shop more than men?” is a bit complex. Women are often far more selective in their purchases than men and are willing to spend the time necessary to find products that fit their needs and requirements. While men are usually more straightforward and goal-oriented in their shopping, women are more detail-oriented, paying attention to the quality of an item before purchasing. The majority of men prefer to get in and get out of a store as quickly as possible, while women generally enjoy the shopping process as a whole.
Female buying behaviors indicate that they want a risk-free and convenient shopping experience, which goes hand in hand with their desire for their purchases to enhance their lifestyles. They frequently prioritize ensuring that their purchases check every box and fulfill their needs, and usually spend more time than men making sure of this before spending any money.
43 percent of women and 52 percent of men prefer making technology purchases online. [Source: First Insight]
74 percent of women report finding items on sale matters to them in their purchasing habits, compared to just 57 percent of men. [Source: Belvg]
34 percent of women report caring about applying coupons and promotions to their purchases, compared to 26 percent of men. [Source: Belvg]
14 percent of women are inclined to study promotional emails, compared to only 8 percent of men. [Source: Belvg]
58 percent of women report checking products and prices on Amazon.com before looking elsewhere, compared to 64 percent of men. [Source: First Insight]
42 percent of women are encouraged to buy online if free delivery is included, as opposed to 35 percent of men. [Source: Nielsen]
91 percent of women buy food and groceries in-store, compared to 86 percent of men who do the same. [Source: First Insight]
Women are 48 percent more likely to use reusable shopping bags than men. [Source: Civic Science]
30 percent of women are encouraged to shop online if they receive text or email updates on product availability, as opposed to 27 percent of men. [Source: Nielsen]
42 percent of women are encouraged to buy online when the purchase includes a money-back guarantee, as opposed to 31 percent of men. [Source: Nielsen]
67 percent of women examine food labels to determine if a product is healthy, while only 48 percent of men do the same. [Source: Nielsen]
Women are 13 percent more likely than men to deem a product premium based on whether it contains high-quality ingredients. [Source: Nielsen]
Slightly more women than men prefer to shop online at 72 percent, compared to 68 percent of men. [Source: Belvg]
Online vs. in-store shopping habits
While the digital shopping landscape continues to grow more robust and popular with each passing year, women are still making more in-store purchases than they are online. However, even though women consumers are more inclined to spend more in-store, they aren’t as inclined to visit a store in person unless they have a specific purchase in mind. Retailers can capture this opportunity by making sure they’re offering the exact products women are specifically searching for when they visit a store.
72 percent of women shop online. [Source: OptinMonster]
When shopping online, 77 percent of women say they add extra items to their carts that they didn’t originally intend to purchase. [Source: First Insight]
Adding extra unplanned items to their cart is more common among in-store shoppers, with 89 percent of women saying they sometimes or always do so when shopping in person. [Source: First Insight]
69 percent of women choose in-store shopping when they need something specific. [Source: First Insight]
56 percent of women choose online shopping when they have a specific need for something. [Source: First Insight]
70 percent of women usually spend $50 or more when shopping in-store, compared to only 49 percent who spend more than $50 when shopping online. [Source: First Insight]
33 percent of women spend over $100 during an average in-store shopping trip, while only 17 percent say they spend over $100 when shopping online. [Source: First Insight]
91 percent of women buy food and groceries in-store. [Source: First Insight]
47 percent of women shop on eBay, and 80 percent of women use Etsy. [Source: RepricerExpress]
46 percent of women shop for clothing and sporting goods online. [Source: Belvg]
25 percent of women purchase books, magazines and learning materials online. [Source: Belvg]
10 percent of women buy medicine online. [Source: Belvg]
35 percent of women spend on travel and holiday accommodations online. [Source: Belvg]
30 percent of women purchase household items online. [Source: Belvg]
26 percent of women purchase event tickets online. [Source: Belvg]
16 percent of women buy music or movies online. [Source: Belvg]
What consumer goods are women buying?
With data pointing to women as most often responsible for the majority of grocery shopping and meal preparation, the food industry represents a significant opportunity for companies to find ways to connect with their female consumers.
Women also spend significant amounts on beauty products, clothes and travel. With clothing ranking as a top spending category among women, the continued evolution of the retail world represents a chance to lean further into the habits of women consumers.
Beauty and skin care spending
Women have historically spent a considerable amount on personal care, cosmetics and skin care, and it’s no different today. While makeup and beauty products aren’t a part of every woman’s routine, almost everyone uses some type of skin care product—even if it’s just sunscreen or hand lotion. This sheds some light on the astonishing size and increasing growth of the skin care market, particularly among women.
While older consumers used to lead the demand for products in these industries, an increasing number of younger women now play a significant part. This could explain the shift in the market, indicating women’s increasing desire for more natural and organic products, which continues to go up as consumers become more knowledgeable about toxic ingredients in their products and factors like sun damage. Cosmetics and skin care brands that recognize these emerging values among their consumers will outgrow those that don’t.
The global skin care industry is estimated to reach $189.3 billion in the U.S. by 2025. [Source: Statista]
Natural cosmetics had a global market value of $34.5 billion in 2018, and are expected to increase in value to $54.5 billion by 2027. [Source: Statista]
Women who spend money on their appearance will spend roughly $225,360 in a lifetime. [Source: OnePoll]
When it comes to beauty-based purchases, women spend the most on facials, haircuts, makeup, manicures and pedicures. [Source: OnePoll]
Women spend $91 a month on facial products. [Source: OnePoll]
The fragrance industry will reach an estimated $91.17 billion globally by 2025. [Source: Health Careers]
Women in their 30s buy more anti-aging products than women between the ages of 40 and 60. [Source: OnePoll]
Women in their 20s make more makeup purchases than any other age group. [Source: OnePoll]
Household and grocery spending
Data shows that women do the majority of household spending, grocery shopping and meal preparation. With women generally spending more time on household duties than men, it’s no surprise that much of their spending is allocated to these categories.
Women are twice as likely to take charge of household grocery shopping than men. [Source: Civic Science]
80 percent of women who have children and live with a spouse or partner say they are typically in charge of meal prep. [Source: Pew Research]
75 percent of women without children who live with a spouse or partner say they are typically in charge of meal prep. [Source: Pew Research]
80 percent of women who have children and live with a spouse or partner say they are typically the grocery shopper. [Source: Pew Research]
68 percent of women without children who live with a spouse or partner say they are typically the grocery shopper. [Source: Pew Research]
Women spend more money per grocery shopping trip than men, averaging $44.43 per trip. [Source: Nielsen]
Clothing spending
Clothes have always been a large category of spend among women. The market value for women’s retail is expected to rise to around $394 billion by 2025, and retailers are becoming more aware of what women want in their clothing. They value versatility and functionality without sacrificing function and utilize their fashion choices as a source of empowerment and confidence.
Growth in the retail industry among women could be due to the fact that economically empowered female consumers who maintain the majority of control of spending in American homes have more purchasing power, much of which continues to be allocated toward clothes.
Digital trends are also impacting women’s shopping habits, and almost three-quarters of women now shop online. Women are increasingly utilizing social media platforms for fashion discovery, product inspiration and finding authentic reviews from their peers online.
On average, the clothes in a woman’s wardrobe equal between $1,000 and $2,500. [Source: CreditDonkey]
9 percent of women have over $10,000 worth of clothing in their closet. [Source: CreditDonkey]
32 percent of women in the U.S. own over 25 pairs of shoes. [Source: CreditDonkey]
Over half of women estimate that 25 percent of their wardrobe goes unworn. [Source: CreditDonkey]
Every three months, 73 percent of women refresh one quarter of their closet. [Source: CreditDonkey]
Around 15 percent of women don’t have clothes older than five years old in their closet. [Source: CreditDonkey]
Women who are 16 and older spend an average of 76 percent more on clothing than men every year. [Source: CreditDonkey]
Women between the ages of 45 and 54 spend $793 per year on clothing, the highest spent of any age group. [Source: CreditDonkey]
75 percent of women over 18 would choose Target for undergarments over Victoria’s Secret. [Source: Civic Science]
Women’s purchasing values
Diversity and inclusion factors have a larger impact than ever on women’s shopping decisions and expectations. With diversity and inclusivity growing increasingly important in the world of retail and beyond, women consumers expect brands to evolve with the cultures they serve. Among women today there is more scrutiny of brands’ and retailers’ values, hiring practices, product-to-market placements and ability to truly listen to their customers.
Women, like all people, are driven by their values and habits, so understanding what’s important to them, what their day-to-day lives look like and what makes them unique is crucial in fostering a true connection that might influence purchasing behavior.
About half of women in the U.S. believe that having minority-held leadership positions is important and believe that retailers would benefit from hiring Chief Diversity Officer positions. [Source: First Insight]
45 percent of women say cultural inclusivity in brands is important. [Source: First Insight]
44 percent of women believe it’s important for influencers to represent diverse points of view. [Source: First Insight]
67 percent of women say that inclusivity in extended sizing is the top diversity factor to consider. [Source: First Insight]
55 percent of women in the U.S. say they would temporarily stop shopping at a brand or retailer who released an offensive product. [Source: First Insight]
71 percent of women believe brands and retailers should make it at least six months without any offensive items released before they would feel comfortable purchasing from them again. [Source: First Insight]
Opportunities for financial success
Women who are active in their own financial planning are less stressed on average than those who avoid it. There are many ways to prioritize financial success such as committing to your retirement savings, learning investment strategies and managing your personal credit and debt.
Managing credit card debt or poor credit is an important starting point on the road to financial success. Taking responsibility for debt or bad credit will help you secure a more prosperous financial future, and utilizing the help of a credit repair team could help you manage the process. If you are a woman moving toward financial independence, know that it’s never too late to take steps toward a brighter financial future.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Sarah Raja
Associate Attorney
Sarah Raja was born and raised in Phoenix, Arizona.
In 2010 she earned a bachelor’s degree in Psychology from Arizona State University. Sarah then clerked at personal injury firm while she studied for the Law School Admissions Test. In 2016, Sarah graduated from Arizona Summit Law School with a Juris Doctor degree. While in law school Sarah had a passion for mediation and participated in the school’s mediation clinic and mediated cases for the Phoenix Justice Courts. Prior to joining Lexington Law Firm, Sarah practiced in the areas of real property law, HOA law, family law, and disability law in the State of Arizona. In 2020, Sarah opened her own mediation firm with her business partner, where they specialize in assisting couples through divorce in a communicative and civilized manner. In her spare time, Sarah enjoys spending time with family and friends, practicing yoga, and traveling.
Settling credit card debt is a potential option when you have many missed payments over several months. If a credit card issuer or collection agency suspects they won’t get paid at all, they might be willing to accept less money than you owe. It’s typically a last resort to be explored after you’ve considered other debt-payoff options.
“Whether or not you can settle depends on each creditor; no two banks have the same collection process or settling parameters,” says Leslie Tayne, founder and managing director at Tayne Law Group. “The outcome can depend on many factors, including the creditor’s policies, the debt amount, the individual’s credit history, and the ability to negotiate effectively.”
Here’s what you need to know about how to settle credit card debt.
🤓Nerdy Tip
Note that settling credit card debt is different from — and riskier than — simply negotiating the cost of existing debt, such as attempting to get fees waived or APRs lowered.
Pathways for credit card debt settlement
There are different options for settling the debt on your credit cards. You can try the do-it-yourself method or have an attorney or company settle debt on your behalf. Regardless, there is no guarantee that the company that owns the debt will be willing to settle. Be wary of anyone offering debt settlement services who promises these results. Many people in their desperation to settle debt are left vulnerable to scams by debt relief companies or other sources. Before hiring anyone to settle debt on your behalf, research their background, history and track record.
Do it yourself
When deciding whether to settle debt on your own or hire someone to negotiate on your behalf, it’s worth considering the pros and cons for both. Hiring someone can cost more, but settling debt on your own can be a risk. The law can come into play, and if you don’t know what to look for, you could dig yourself deeper into debt and spend more money down the line to fix those mistakes. Consider your options and what is best for your situation.
Hire an attorney experienced with debt settlements
An attorney who specializes in debt settlement can help you consider factors like federal and state laws, statutes of limitations for debt, time-barred debts, whether you’re judgment-proof or have a lien due to other debts, credit reporting, and tax outcomes, among other things. They may also understand how certain creditors or collections agencies work and the kind of offers they are willing to accept.
It can be difficult to wrap your head around attorney costs when you’re already struggling to meet payments. It might be possible to find an attorney who offers reduced costs through a legal aid office, but they can be in high demand. Costs for a private attorney may vary based on the type of work involved. They may charge a flat fee per creditor, a percentage of the debt eliminated, or an hourly rate. Attorneys are in theory held to ethical standards, but some have been known to not charge fairly. When hiring an attorney, it’s in your best interest to do an online search for consumer reviews, consumer complaints, actions taken by the Consumer Financial Protection Bureau (CFPB), and the attorney’s standing with the state bar.
Hire a debt relief company
A debt settlement or relief company is an option, but it can come with risks and steep costs. These companies generally charge excessive fees and rarely deliver on the promised results, leaving you worse off financially, according to the CFPB’s website. You’re typically required to stop paying your balances and instead put that money into a savings account. As a result, you’ll incur late fees, penalty interest rates and potentially other charges. Pricey service fees may also apply for the debt and the savings account, which can be counterproductive if those costs cancel out the value of any balances settled. Some creditors may also refuse to work with certain debt relief companies.
🤓Nerdy Tip
If you choose to work with a debt settlement company, the CFPB’s website suggests contacting your state attorney general or a local consumer protection agency to see whether the company has any consumer complaints on file. Some states also require debt settlement companies to be licensed. You can verify if a company is licensed through your state’s regulator or attorney general.
How to determine if settlement is right for you
If your credit has already taken a hit because of missed payments for six months or longer, debt settlement is an option to consider, according to Tayne, but it’s not without drawbacks. Beyond the credit repercussions of missed payments, this option can leave a lasting mark.
“On a credit report, a settled account is identified as being ‘settled for less than the full balance,’” said Margaret Poe, head of consumer credit education at TransUnion credit bureau, in an email. “The settled account will remain on a credit report for seven years from the date of first delinquency, as with other derogatory remarks on a credit report.”
Even if you are able to settle debt, the journey toward that agreement may be packed with pitfalls. You should prepare to receive calls from your creditor or a debt collector as payments become past due. The costs will also keep spiraling as interest and fees continue to accrue. And, as you’re missing payments, it’s possible to get sued by the creditor or collection agency.
It’s a big risk to take when there’s no guarantee that you can settle debt.
How to negotiate a credit card debt settlement yourself
Negotiating a credit card debt settlement isn’t a one-size-fits-all approach, so the following steps may not work for everyone, and they don’t factor in other possible debts. You’ll need certain financial resources to settle debt. If you’re having trouble covering essentials like housing and food, consider bankruptcy as a potential option.
1. Consult an expert
Before trying to negotiate yourself, it may be in your best interest to consult an expert early in the process. An expert may alert you to blind spots. You don’t have to hire an expert or a company for the long term if the costs are overwhelming, but at the very least you can understand if you should go at it alone or consider other options like a debt management program.
You can get an initial consultation with an attorney or a certified credit counselor. The latter will be more affordable, but credit counselors aren’t very involved in the settlement process. What they can help with is exploring your options and helping you gain an understanding of whether a do-it-yourself approach is a good idea.
“We can obviously help with the budgeting process and thinking about, you know, other possible ramifications,” says Thomas Nitzsche, senior director of media and brand at Money Management International, a nonprofit credit counseling agency. “If a debt management program is not viable, the counselor is going to tell you that you really need to seek legal advice.”
An attorney will be more familiar with the settlement process. Unless you hire an attorney to represent you, though, that person can only offer general advice that may not be specific to your situation. Regardless, both experts are skilled at negotiating credit card debt, so it’s wise to at least consult one.
2. Figure out whom and how much you owe
Understanding who owns your debt is crucial. You can get some of that information in your free credit report from annualcreditreport.com, according to Tayne. But the report may not account for all of your debt in some cases. Judgments or liens don’t always show up on a credit report. You can go to your county recorder’s office to get information about potential judgments or liens and use online directories to find statutes of limitations by state, she says.
These are the kinds of steps an expert can potentially help you plan or consider before starting the settlement process on your own, hence why we recommend the consultation step above first.
3. Know your budget
By giving your finances an in-depth look, you can see how much money is truly available to negotiate a settlement. Review your budget and statements to explore the possibility of eliminating unnecessary purchases like lapsed free trials or others. Also look for opportunities to swap products or services for less costly alternatives.
In your review, you’ll also need to assess the highest and lowest amount you can afford to pay in a settlement. Consider whether it’s best to negotiate several payments or a lump sum.
The range should allow you to still prioritize essentials like rent, utilities, transportation, gas, food and anything else you may need. Ideally, you can negotiate for an amount that gives your budget room to breathe. Leave a buffer for potential emergencies and tax-related costs that may apply on debts forgiven over $600. Depending on your circumstances, it may be possible to get the tax costs waived, Tayne says.
4. Get organized
Once you know who owns your debt, look up contact numbers for those companies and write them down. You should also make a list of the debts, the amounts outstanding, and the range you can afford to pay back.
Here are some of the documents you may need:
Your budget and range for settlement.
Your credit report.
Documents concerning judgments or liens.
A script of what you’re planning to say.
A list of questions if a settlement agreement is proposed.
Practicing what you’re going to say will also help you be more confident in the actual negotiation process. Don’t step outside the parameters of what you can afford, and don’t negotiate out of fear — even if the person on the other end of the call seems intimidating.
In case you are able to get a settlement agreement, it helps to have a list of follow-up questions. For instance, you may want clarity on the following:
When, if at all, can you get the agreement in writing?
How will the settled debt appear on your credit report?
What happens if you don’t honor the terms of the agreement?
Will you be taxed on the amount settled?
Will you get a 1099-C for the settlement, and if so, when?
5. Make the call
Once you’ve done your prep work, you’re ready to make the call to the creditor or debt collection company. Before dialing, here are some best practices to consider:
To prevent unwanted surprises, don’t provide your bank account information upfront to the company that owns the debt. Wait until you have a signed agreement.
Write down the names of people you speak to and the time you spoke to them.
Write down the numbers of departments before accepting a transferred call.
Make as many calls as it takes to get through to the right person.
Start negotiations at the lowest offer possible (i.e., even if you can afford to pay 60%, start at 20%).
Once you’re ready to dial, ask to speak with an employee who can negotiate your debt. Start by asking, “I would like to settle my outstanding credit card debt. Can we discuss any options that you offer?” If you’re asked why you can’t pay it off, avoid revealing too much information, to prevent it from potentially being used against you in the settlement process.
“What consumers tend to do is just dump on the creditor tons of information that impacts and impedes the settlement process,” Tayne says. “Somebody who is an attorney understands how to filter certain information in order to appropriately negotiate in the client’s best interest.”
Once you share that you’re struggling to meet payments, the account may be closed if it’s still with the original creditor.
🤓Nerdy Tip
Don’t be afraid to ask for more time to think about a settlement offer. Ask for the direct number so that you can pick up where you left off. Don’t agree to any terms or offers that are unclear or out of budget. Ask for clarification or a breakdown of costs, if needed.
6. Get the agreement in writing
Request the agreement in writing and carefully review it before signing to ensure it includes the terms you agreed to. You might be under the impression that you’ve settled debt, but it may not be the case until you get all of the necessary details in writing.
The agreement should include the name and number of the account settled, the name of the creditor, the date, and the terms depending on whether you’ll have different payment deadlines or make a lump-sum payment, according to Tayne. You can also feel free to request that credit reporting details be included and anything else that might be relevant or useful to document.
Don’t make any payments or share any bank account details until the agreement is finalized.
7. Honor the settlement agreement
It’s important to meet the terms of the new agreement. Failure to do so can result in a lawsuit and fewer opportunities to negotiate in the future, Tayne says. To avoid further complications, be sure to pay off any tax-related costs that result from the debt settled.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
Credit hacks like challenging errors on your credit, lowering credit use, increasing available credit, and becoming an authorized user may help increase your credit score.
Preparing for a mortgage application, looking to upgrade your credit card or simply wanting to improve your credit ASAP? While creditworthiness is a long-term investment and your score will need to be cultivated over time, these credit hacks may help you improve or repair your credit relatively fast. However, there are no guarantees when it comes to credit, so know that results will vary based on the specifics of your situation.
Below, we’ll break down our top 12 credit tactics into three broad categories: credit score hacks for quick gains, credit repair hacks for efficiently rebuilding damaged credit, and credit card hacks to help you improve your standing by effectively managing credit card debt.
Top 12 credit hacks
Challenge inaccuracies on your credit report
Consider paying off installment loans
Lower your credit usage
Increase your available credit
Write a goodwill letter
Become an authorized user
Open a secured credit card
Apply for a credit builder loan
Work with a credit repair company
Consolidate debt from multiple credit cards
Use the snowball method to pay off credit cards
Use the avalanche method to pay off credit cards
Credit score hacks
Determined by factors including debt repayment history, overall credit utilization, and the age of your credit lines, your credit score can affect many vital aspects of your financial life. Everything from credit card interest rates to whether you qualify for an apartment could depend on that number.
If you could use a credit boost for any reason, these actions could help you get a higher score in a short period of time.
1. Challenge inaccuracies on your credit report
In some cases, your credit score may be lower than it should be due to a reporting error. Here’s how to identify and remove inaccuracies like mistaken late payments from your report:
Step 1: Request a copy of your credit reports from AnnualCreditReport.com.
Step 2: Read your credit report carefully, specifically looking for any errors in personal information, listed accounts, late payments, or duplicates.
Step 3: If you discover anything you believe is inaccurate, write a dispute letter (with return service requested) to the bureau’s address explaining the inaccuracy.
Step 4: Wait 30 to 45 days for a response.
2. Consider paying off installment loans
Installment loans like mortgages, student loans, or personal loans are essentially lump-sum amounts that you borrow and then repay over time. Paying these off may have a positive impact on your credit score in some situations.
Loans and credit lines factor into your debt-to-income ratio (DTI), or the percentage of your income that goes toward repaying debts every month. Although your DTI doesn’t factor into your credit score, it does matter for many housing situations, as lenders prefer to see this number stay lower than 36 to 43 percent for homeowners and below 15 to 20 percent for renters.
If your DTI ratio is above that range and you have installment loans, you may want to consider paying off one or more to bring the ratio down. This could be especially helpful if you have one or more loans with a high interest rate.
3. Lower your credit usage
One of the most important credit scoring factors is how much of your available credit you use. It’s recommended to keep this ratio below 30 percent. Cutting a high credit utilization ratio to below that threshold could give you a relatively quick credit boost compared to longer-term strategies.
Let’s say you have one credit card with a $500 limit and charge $200 every month on it. In this example, your utilization rate is 40 percent. To keep your utilization rate below 30 percent, you’ll want to cut your charges to less than $150 per month.
4. Increase your available credit
If it’s not feasible to lower your credit usage, you may want to consider increasing your available credit. In the example above, if you add a second credit card with a $500 limit on top of your current $500-limit card, you would double your total available credit to $1,000. The same $200 charge each month would drop from 40 percent to 20 percent of your available credit.
Be aware, however, that applying for a new credit card comes with a hard inquiry, which will temporarily hurt your credit score. Also consider that you may be tempted to use more credit if it’s available, so this option may only be effective if it doesn’t otherwise affect your spending habits.
5. Write a goodwill letter
If a late or missed payment is dragging down your credit, a goodwill letter could get the negative mark removed from your credit report. This letter is essentially a request to a specific lender to have that item struck from your report based on an otherwise strong payment history.
Lenders are by no means required to follow through on these requests—hence the name. But since this tactic is free and carries virtually no negative consequences, it’s worth a shot. If you choose to try this, your letter should include:
Your account number
A description and the date of the negative mark
Details about your history with the lender
An explanation of why this was a one-off event that hasn’t happened since and won’t happen again
A specific request to have the item removed from your credit report for all three bureaus
Credit repair hacks
Whether you’re working to correct past late payments, get out of a cycle of debt or fix past financial mistakes, credit repair can take time. But if you need to know how to quickly build credit after it’s been damaged, these four tactics may be able to help you restore your standing as soon as possible.
6. Become an authorized user
By becoming an authorized user on someone else’s account, you can benefit from their on-time payments. An authorized user is essentially a secondary person who is authorized to use a credit line without being responsible for repaying it. This allows that authorized user to potentially improve their credit without making other significant changes to their own spending or accounts.
However, this does come with risk for the account holder and has some limitations on who is eligible. If the authorized user racks up debt the account holder can’t afford to pay off, this could backfire. Due to this liability, this is only a good option if you have someone in your life who shares an immense amount of mutual trust with you, such as a family member or significant other.
7. Open a secured credit card
Secured credit cards can be great credit-building options for those who have trouble qualifying for standard credit cards. These cards require an up-front deposit, which typically becomes the card’s credit limit.
By making on-time payments, you may be able to build your credit up enough to qualify for a standard credit card with a higher limit, which would also increase your total available credit and potentially lower your credit utilization rate.
8. Apply for a credit builder loan
Designed to help people with low or no credit improve their scores, credit builder loans work like regular loans—but in reverse. Rather than getting money up front that you pay back over time, you pay into a savings account for a set period of time and then receive the loan amount afterward.
Here are some tips for taking advantage of a credit builder loan:
Ensure you can afford to dedicate enough funds every month to building up the full loan amount.
Consider getting a smaller loan amount than you may need to keep your monthly payments manageable.
Make each payment on time to help improve your credit.
Have a plan for the funds you receive from the loan, such as paying off other debts, contributing to a savings account, or making a down payment.
9. Work with a credit repair company
For some people, fixing credit may be best left to professionals. Credit repair companies are capable of reviewing credit reports, sending challenges, sending requests, and making individualized long-term credit plans. For a monthly fee, their teams can help you address issues on your credit report to ensure the information on your report is fair, accurate, and substantiated.
Credit card hacks
Navigating credit cards can be tricky. If you aren’t careful, high interest rates and long repayment terms can lead to a cycle of debt that can be hard to escape—and even harder to recover from. These credit card hacks could improve your credit score by helping you gain control of your debts, manage your repayments or pay off your balances efficiently.
10. Consolidate debt from multiple credit cards
If you’re having trouble managing repayments for multiple credit cards with balances that carry over from month to month, consider consolidating them with a personal loan or balance transfer.
Consolidating credit card debt with a personal loan
With typically high interest rates, credit cards come with expensive debt when their balances are repaid gradually. If you’re balancing debt from multiple credit cards but you have relatively strong credit, consider applying for a debt consolidation loan from a bank.
The personal loan you choose should be big enough to pay off all or most of your current credit card balances at once. The resulting loan should have considerably lower interest rates and offer the added benefit of reducing multiple monthly due dates to just one.
Consolidating credit card debt with a balance transfer
A balance transfer is basically a way to move debt from one account to another. This is particularly beneficial if you’re able to transfer a balance from a high-interest credit card to one featuring a promotional period with low or no interest. This window of time gives you an opportunity to pay off the debt from one credit card gradually without incurring interest charges.
11. Use the snowball method to pay off credit cards
For this approach to managing debt across multiple credit cards, you’ll focus on paying off the card with the lowest balance first. This strategy allows you to take an organized approach to debt reduction over time. Here’s what that process looks like.
Step 1: Set a monthly budget for the amount of money you can afford to allocate to credit card debt.
Step 2: Make only the minimum payments on every card except the one with the lowest balance.
Step 3: Spend the rest of your monthly credit card budget on paying down the card with the lowest total balance.
Step 4: Once you’ve paid that card’s balance in full, repeat the process for the card with the next-highest balance.
12. Use the avalanche method to pay off credit cards
Another way to manage multiple credit card payments is to target the card with the highest interest rate. The benefit of this approach is that it saves you money in the long term by reducing the amount of money you have to put toward interest payments. The process is otherwise the same as the snowball method.
Step 1: Decide on a budget for paying off credit card debt each month.
Step 2: Each month, pay the minimum amount due on every credit card except for the one with the highest interest rate.
Step 3: Dedicate your remaining credit card budget to over-paying the minimum on the card with the highest interest rate.
Step 4: When you’ve paid this card off, do the same for the card with the next-highest interest rate.
Can credit hacking help you reach your credit goals?
At the end of the day, there’s no substitute for executing a long-term credit plan and sticking to it.
There’s no shortcut to consistently using credit responsibly, managing your credit utilization ratio, and making on-time payments. However, these credit hacks could set you on your way toward repairing your credit quickly or growing your credit score sustainably. In the meantime, you may want to see if using a credit repair service may be beneficial for your unique situation. You can get a free credit snapshot today to see where you stand and how credit repair can help you work to reach your credit goals.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Paola Bergauer
Associate Attorney
Paola Bergauer was born in San Jose, California then moved with her family to Hawaii and later Arizona.
In 2012 she earned a Bachelor’s degree in both Psychology and Political Science. In 2014 she graduated from Arizona Summit Law School earning her Juris Doctor. During law school, she had the opportunity to participate in externships where she was able to assist in the representation of clients who were pleading asylum in front of Immigration Court. Paola was also a senior staff editor in her law school’s Law Review. Prior to joining Lexington Law, Paola has worked in Immigration, Criminal Defense, and Personal Injury. Paola is licensed to practice in Arizona and is an Associate Attorney in the Phoenix office.
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