On a tight budget? How to get rid of your credit card debt quickly

With persistent inflation driving up the costs of groceries, gas, housing and other essentials, millions of Americans are facing serious financial strain right now. And, the situation is even more dire for those carrying high-interest credit card debt, as the Fed's rate hikes throughout 2022 and 2023 had a big impact on credit card rates. For example, the average credit card currently carries an average APR of nearly 21.6%, but there is no federal cap on how high credit card interest rates can be, so many cards come with rates that are higher than that. 

And, with the cost of living still climbing, many people currently have no choice but to turn to high-rate credit cards to pay for essentials that they otherwise couldn't afford. But that can be a risky approach, as the exorbitant interest rates tied to credit cards can cause your balance to compound quickly, ultimately resulting in delinquent payments, maxed-out credit limits and other serious debt troubles. 

So, if you find yourself in the difficult position of juggling mounting credit card balances while cash is tight, it's crucial to take action quickly before the situation worsens. While there's no easy fix for getting out of credit card debt, especially when funds are limited, there are strategies you can use to quickly chip away at what you owe and reduce burdensome interest costs. 

Need a fresh start? Find out more about your debt relief options here.

How to get rid of your credit card debt quickly

There are a few options for getting rid of your credit card debt when you're dealing with a lower-than-average income or a tight budget, including:

Credit card debt forgiveness

Many debt relief companies offer credit card debt settlement programs, also known as credit card debt forgiveness programs, to those they work with. These programs are intended to help those who are unable to keep up with their current credit card debts, and the goal is to have a portion of the credit card balance forgiven or "charged off" by the lender. 

To pursue this route, you'll typically need to make a strong case for your inability to repay what you owe. After all, credit card companies are more likely to forgive a portion of your debt if it's clear that you can't feasibly repay the whole balance. If successful, though, your credit card balance will be reduced, and the remaining balance will be settled with a lump-sum payment. 

Find out how the right debt relief options can help you get rid of your credit card debt.

DIY card debt settlement

Rather than having a debt relief company negotiate with creditors to forgive your debt, you could try negotiating directly with card issuers to try and settle your balance for less than the full amount owed. By taking the do-it-yourself (DIY) route, you can save money on fees charged by the debt relief company, though it will take more work on your end. 

During negotiations, you'll propose a lump sum payment you can afford, perhaps using funds from savings or other sources. The creditor may accept the deal to avoid greater losses through a lengthy default process, simply writing off the settled portion of the debt. Just be sure to get any settlement amount and terms agreed upon in writing before making a payment.

Debt management 

Debt management is another option worth considering if you're trying to get rid of high-rate credit card debt quickly while on a tight budget. When you enroll in a debt management plan, the interest rates or fees tied to your credit card debt are negotiated down through special arrangements between the agency or company you work with and your creditors. You then make a single monthly payment to an accredited credit counseling or debt relief agency, which distributes the money to your creditors to pay down each of your enrolled debts on a set schedule. 

Your credit may take a hit when you enroll in one of these programs, as you're typically required to close all enrolled accounts. However, completing the plan allows you to become debt-free in three to five years, on average. Although that may not seem like a quick solution, it can take decades to pay off your card debt by making minimum payments alone, so it's certainly a faster approach in many cases.

Credit card hardship programs 

Most major card issuers offer internal hardship plans, hardship forbearance or other relief programs for cardholders who are facing financial difficulties due to job loss, medical issues or other short-term hardship. Under these programs, your card issuers may offer temporarily reduced interest rates and minimum payments, offering you some relief from the high costs of your debt and allowing you to expedite the payoff process. 

However, enrollment is typically approved based on your specific situation and the requirements may be strict. So, if you think you may qualify for a credit card hardship program, you should try to start the application process early, and if you find that you don't qualify, you may want to consider one or more of the other options on this list.

Restructuring or bankruptcy 

When all other options are exhausted, you may find that your credit card debt and limited income mean you need to explore more drastic measures like debt restructuring or even bankruptcy to gain legal protection from creditors. 

For example, Chapter 13 bankruptcy creates a court-approved repayment plan for paying back a portion of debts over time. On the other hand, Chapter 7 bankruptcy discharges most debts entirely. 

While these options severely impact your credit, they do provide an opportunity for a fresh financial start if your situation is dire. And, bankruptcy may be the fastest path to getting rid of your debt.

What credit card debt relief option is best with a low income?

There are several potential paths for fast credit card debt relief, so how do you determine the best solution for your situation? Start by taking an honest assessment of your complete financial picture, including income, expenses, assets and overall debt levels. Those with relatively low balances and some available funds may have success negotiating lump-sum settlements or qualifying for debt consolidation loans. Those who are truly insolvent with no assets may need to pursue bankruptcy.

Your credit standing is another major factor. Good credit opens more options, like balance transfers and loans. Damaged credit means lenders are unlikely to approve new financing, making debt management plans or creditor negotiations better paths. You also need to consider how quickly you need relief. Bankruptcy provides the fastest fresh start, while debt management takes several years to complete.

And, you should also consider what you're willing to sacrifice, and what you're not, to get rid of your debt. For example, you may be willing to take a credit score hit to become debt-free faster through bankruptcy. Or, your goal may be to preserve your credit score as much as possible through options like hardship plans that don't directly impact it.

The bottom line

While digging out of deep credit card debt on limited funds is undoubtedly challenging, the strategies outlined above can provide potential paths forward. But no matter what option you pursue, taking quick action is key to preventing the compounding interest and late fees that can rapidly intensify the situation. Depending on the situation, it may also benefit you to consult a qualified credit counselor or bankruptcy attorney if you're facing overwhelming debt. That way, you can make fully informed decisions for your circumstances and get back on the road to solid financial footing.