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Today’s article is contributed by Good Nelly who talks about 3 different methods you can use to get rid of credit card debt.

But before we get to it, let us first look at two of the most popular ways to deal with credit card debt.

And yes we are talking about the Debt- Snowball method and the Debt- Avalanche method.

It’s quite a tactical process where you find the best strategy to eliminate debt, either by addressing the highest debt or the lowest one to pay off.


Debt-Avalanche Method:

Here you tackle your biggest debt first and then handle the smaller ones as you progress. This way the burden is reduced once you eliminate your highest interest rates on your credit card right at the start.


Debt Snowball: 

On the other hand, this works the opposite. You deal with the completing repayments on your smaller debts first and then work your way to the ones with higher repayments. This is great if you are looking for quick victories to motivate you to eliminate debt altogether.


Every time you receive your pay-check make sure you keep money aside to repay your debt. Building them up only adds more pressure on yourself.


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Few best ways to do this are by following a few money saving techniques.


Debt consolidation program

Debt consolidation program is a financial strategy that helps you consolidate all your debts and bills into a single monthly payment. A debt consolidation company generally offers such a program.

This type of program is great for unsecured debts that include credit card debts, personal loans, medical bills, and so on.


Here is how a debt consolidation program works:


  • This program starts with counseling, where you’ll speak to the counselors to be sure whether or not the program will be fruitful for you.
  • When you enroll in this program, you just have to make a single monthly payment to the company, which they can disburse among your creditors.


The benefits of a debt consolidation program include:

  • The negotiation between your creditor and counselor helps you reduce the interest rate on your bills and debts.
  • You just have to make a single monthly payment.
  • Your late fees or penalty fees may get waived off.
  • No repeated calls and harassment from your creditors.


The only drawback of this program is, if you miss making payments for two consecutive months, you might not be able to continue with the program.


Note: More often the term debt consolidation program is interchanged with the word debt consolidation loan which is a totally different concept. A debt consolidation loan refers to taking out a new loan to repay other loans. Both ways may have a similar result like paying off debt with a single payment at a lower interest rate. But they work quite differently, as a debt consolidation program helps you consolidate your credit card debts through professional help, and a debt consolidation loan just transforms your existing debt into a new loan, which you repay through single monthly payments.


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Debt settlement program

Debt settlement program is the best way to pay off credit card debt fast when you can’t make the payment in full. Your creditors may have a possibility of not agreeing to the proposal.

If your creditors don’t agree, you can tell them that then you might have to go for filing bankruptcy. This can work for you as your creditors know very well that they have a higher chance not to see a dime if you file bankruptcy.   


Here is how a debt settlement program works:

  • In this plan, the debt settlement company assesses your financial condition and decides upon a monthly amount you’ll be able to pay.
  • Then they negotiate with your creditors to cut off the outstanding balance and determine a revised payoff amount.
  • They will instruct you stop paying the creditors but to pay the monthly amount to the company that’ll be deposited into an escrow account created in your name.
  • Once one of your creditors agree, the settlement company will use the funds to offer the lump sum amount to settle the debt.
  • Thus, you’ll get rid of debts.


 The advantages of this program include:

  • Reduces your debt amount.
  • Helps you to get rid of creditors’ irritating calls.
  • Helps you avoid asset liquidation through bankruptcy.


 You’ll see a few debt settlement risks:

  • Though it is not as damaging as bankruptcy, it can make a negative impact on your credit score. It later may affect your credit availability, future loan terms and conditions, and more.
  • You may have to pay a tax on the forgiven debt amount.
  • Another drawback is it may take time to improve your credit score after you settle debts. But at the end, you’ll get your credit rebuilt and also approved for unsecured debt with suitable terms and conditions.                               

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Debt management program

The debt management program helps you to pay off your debts at a lower interest rate.

In this plan, the debt management agency negotiates on behalf of you for a lower interest rate on your debt. They also manage to reduce or waive any penalties. With the help of this program, you can get out of debt within 3-5 years.

A debt management program almost works the same as a debt consolidation program. It helps people to get back to their financial state by eliminating unsecured debts like credit cards, student loans, and medical bills.


Some points you need to keep in mind while enrolling in a debt management program:

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  • It can take 3 to 5 years to pay off debts.
  • The company can set a limit for you like not going for additional credit when you’re involved in this program.
  • If you are late in making monthly payments, you lose chances to repay debt on a reduced interest rate and decreasing the debt as well.


There are a lot of companies that claim to help people to get out of debt. Very few among them stick to it.

So, before you choose an organization make sure it holds a strong reputation. It is always recommended to ask people, go through reviews, and research service providers to choose a reliable organization.

You want to come out of the trap and not to fall into another again. Therefore, the steps you’re going to take, are well thought of.

Want to get rid of credit card debt? Learn how to use the consolidation and management method to pay off your debt.