Getty Images 
When credit card bills start piling up, the weight of that debt can put a lot of pressure on your budget, especially if you’re already struggling to keep up with your regular expenses. But if you’re growing frustrated with your credit card debt, you’re certainly not alone in the struggle. The average cardholder now carries nearly $8,000 in credit card debt, and with credit card interest rates hovering close to 23% currently, what started as a manageable expense can quickly spiral into a financial nightmare.
But while it’s easy to find yourself in serious credit card debt right now, there are, fortunately, a few potential ways to get out of the issue. For example, many people turn to credit card debt management programs when they’re struggling to manage their credit card debt effectively. These programs typically involve working with a credit counseling agency to negotiate lower interest rates and fees with creditors and create a structured repayment plan. But is this approach always the right move?
The truth is that debt management is a good option to consider, but it won’t be right for everyone. For some people, debt management provides the structure and relief needed to climb out of debt. For others, it may delay financial recovery or create new problems, so it’s important to understand when debt management makes sense — and when it doesn’t.
Explore your credit debt relief options today.
4 times credit card debt management is worth it
If you’re considering this type of debt relief, here’s when it may be worth it:
When you’re dealing with compounding interest and high rates
If your credit cards carry interest rates above 20%, a debt management plan could substantially reduce those rates, potentially saving you thousands in interest over the life of your debt. This makes the monthly fees charged by most debt management companies worth the cost.
Speak to a debt relief expert about the help available to you now.
When you need structure and accountability
Let’s face it — many of us struggle with financial discipline. If you’ve tried to tackle your debt alone but find yourself backsliding or making only minimum payments, the structure of a debt management plan might be exactly what you need. The regular payment schedule and having to avoid opening new credit accounts create a framework that helps many people stay on track.
When your debt is substantial but not overwhelming
Debt management plans typically work best for people who have an amount of credit card debt that’s significant enough to warrant intervention but not so massive that more drastic measures (like bankruptcy) would be more appropriate. Depending on your income, that could be a few thousand dollars to tens of thousands of dollars. With this level of debt, the savings from reduced interest rates can meaningfully impact your financial recovery.
When you have multiple credit card payments
Juggling multiple credit card payments each month increases the risk of missed payments and late fees — which can seriously damage your credit and add to the costs of your credit card debt. Consolidating your debt through a debt management plan can simplify things by giving you a single monthly payment, one that’s typically lower than what you would otherwise pay.
4 times credit card debt management isn’t worth it
On the other hand, here’s when you may want to look at other options instead:
When you’re facing a true financial emergency
If you’ve lost your job, face major medical expenses or are dealing with another severe financial crisis, a debt management plan might simply delay the inevitable. In these situations, more immediate relief through bankruptcy might be appropriate. While bankruptcy has serious consequences, sometimes a fresh start is the most responsible choice.
When your debt-to-income ratio is extremely high
If your unsecured debt exceeds 50% of your annual income, debt management may just be prolonging your financial pain. The math simply doesn’t work for extreme debt loads, even with reduced interest rates. In these cases, debt forgiveness (negotiating to pay less than the full amount owed) might make more sense, or consulting with a debt relief expert could reveal better options for your situation.
When you could realistically pay off the debt yourself within a year
Debt management plans typically come with setup fees and monthly maintenance fees. If you could buckle down and pay off your debt within 12 months through an aggressive payment strategy, you’d likely save money by avoiding these fees.
When you need access to credit
Most debt management plans require you to close your credit card accounts while you’re enrolled, which can limit your financial flexibility. If you rely on credit for emergencies or work-related expenses, this could be a major downside.
The bottom line
Credit card debt management isn’t a magic solution, but it can be a powerful tool for the right person in the right circumstances. It can be a game-changer if you’re struggling with multiple high-rate payments or an overwhelming balance. But in some cases, the limitations and costs may make it a less attractive option. The key is to evaluate your financial situation and choose a strategy that aligns best with your immediate needs and your long-term financial goals.
