Dealing with mounting credit card debt can be overwhelming and stressful, but you’re not alone in this journey. In fact, Americans now have more than $1 trillion in credit card debt, an all-time high. And with the average interest rate well over 20%, many families are feeling the growing weight and financial pressure that unpaid credit card balance bring.

At Blue Water Credit, we understand the challenges you face when it comes to managing your finances. So, in this comprehensive guide, we will explore various options available for dealing with credit card debt.

Whether you choose to pay it off through disciplined strategies, consolidate your debts, settle your debt, or consider bankruptcy, we’re here to help you make an informed decision that aligns with your financial goals.

This information is just an outline for educational purposes, but consult your financial planner, CPA, and possible attorney for accurate information about the items on this list.

Option 1: Paying Off Credit Card Debt

1.1 Create a Budget: Start by assessing your current financial situation. Develop a monthly budget to track your income, expenses, and debt payments. This will help you identify areas where you can cut costs and allocate more funds towards paying off your credit card debt.

1.2 Snowball or Avalanche Method: Two popular debt repayment strategies are the snowball and avalanche methods. In the snowball method, you pay off the smallest balance first while making minimum payments on other cards. In the avalanche method, you prioritize the card with the highest interest rate. Both methods are effective; choose the one that suits your financial situation and level of discipline best.

1.3 Negotiate Lower Interest Rates: Reach out to your credit card companies and ask if they can reduce your interest rates. A lower interest rate can save you money in the long run and make it easier to pay off your debt.

1.4 Debt Consolidation
Debt consolidation is a method where you combine multiple credit card balances into a single, more manageable loan. Keep in mind that it often sounds great at first, but does not save you as much as you think and still causes damage to your credit score like some of the options further down this list.

Here are some options for consolidating credit card debt:

Option 2: Debt Consolidation

2.1 Balance Transfer Credit Cards: Many credit card companies offer balance transfer cards with promotional 0% APR periods. Transferring your high-interest balances to a 0% APR card can save you money on interest, but be mindful of transfer fees and the end of the promotional period.

2.2 Personal Loans: Consider taking out a personal loan with a lower interest rate than your credit cards. Using the loan to pay off your credit card debt simplifies your payments and reduces the overall interest you’ll pay.

2.3 Home Equity Loan or Line of Credit: If you own a home, you might be eligible for a home equity loan or line of credit. These options usually offer lower interest rates, but they put your home at risk if you can’t make the payments.

2.4 Debt Management Plans (DMPs): Non-profit credit counseling agencies offer DMPs, which allow you to make a single monthly payment to the agency, and they distribute the funds to your creditors. DMPs often come with lower interest rates and fees, making it easier to pay off your debt.

Option 3: Debt Settlement
Debt settlement involves negotiating with your creditors to settle your debt for less than what you owe. While it can provide debt relief, it may negatively impact your credit score. Here’s how it works:

3.1 Work with a Debt Settlement Company: You can hire a debt settlement company to negotiate on your behalf. They’ll typically require you to make monthly payments into an escrow account, which they will use to negotiate with your creditors.

3.2 Negotiate with Creditors: Debt settlement companies will work to lower the amount you owe, often settling for a percentage of the original debt. This can provide significant savings but may result in taxable income.

3.3 Impact on Credit: Debt settlement can have a negative impact on your credit score, as settled accounts are typically marked as “settled” or “paid, settled for less than the full amount.”

Option 4: Bankruptcy
Bankruptcy should be considered as a last resort, as it has severe and long-lasting consequences on your credit. However, it can provide a fresh start for those facing overwhelming debt. There are two main types of personal bankruptcy in the United States:

4.1 Chapter 7 Bankruptcy: Also known as liquidation bankruptcy, Chapter 7 involves the sale of non-exempt assets to pay off creditors. Most unsecured debts, including credit card debt, are discharged, but you may lose some of your assets.

4.2 Chapter 13 Bankruptcy: Chapter 13 bankruptcy is a reorganization plan that allows you to repay your debts over a specified period, typically three to five years. It’s suitable for individuals with a regular income who want to protect their assets while restructuring their debt.


We understand that dealing with credit card debt can be challenging, but you have multiple options at your disposal. Whether you choose to pay it off systematically, consolidate your debt, settle with creditors, or other options, it’s essential to assess your financial situation and educate yourself about the choices available.

Keep in mind that most of these methods of paying odd credit card debt will affect your credit score in some way or form. Some methods of dealing with debt like settlement, consolidation, or bankruptcy can cause some serious long-term damage to your score.

So, contact Blue Water Credit for information about the credit score aspect of these debt options before you do anything.