More than half of Americans between 50 and 64 carry a balance on their credit cards, according to an AARP survey, and nearly half of people 50 and older with card debt use cards for basics like food and utilities. With card rates north of 20%, that gets expensive fast.
Debt can feel overwhelming, especially with retirement in your near future. There are, however, steps you can take to reduce and manage it effectively.
1. Call your creditors
Card issuers, utilities and medical providers may offer hardship options such as a lower rate, paused payment or fixed repayment plan.
Start by listing every balance, rate, minimum payment and due date as part of your plan to pay off credit card debt. Then call and ask what they can offer. It costs nothing to try.
2. Consult a credit counselor
A nonprofit credit counseling agency can review your budget and may set up a debt management plan. You make one monthly payment to the agency, which pays your creditors and may negotiate lower card rates. Monthly fees often run $25 to $50.
Plans typically last three to five years, enrolled cards generally must be closed, and the plan does not reduce what you owe. Before you start, understand how credit counseling can affect your credit.
3. Consolidate balances
With decent credit, you may qualify for a cheaper way to carry the balance. A 0% balance transfer card commonly offers 12 to 21 interest-free months for a 3% to 5% transfer fee. A consolidation loan offers a fixed rate and payoff date.
Either can help, but only if the new cost is lower and you do not run the cards back up.
4. Release home equity
Homeowners can use a home equity loan, HELOC (home equity line of credit) or cash-out refinance to replace expensive card debt with lower-rate borrowing. There are several ways to tap home equity in retirement.
Homeowners 62 and older may also qualify for a Home Equity Conversion Mortgage, the most common reverse mortgage, which requires no monthly mortgage payments as long as they remain eligible.
Struggling with debt in retirement? A reverse mortgage can turn your home equity into tax-free cash for seniors 62 and older, no house sale required. Use the funds for medical bills, home repairs, or even debt — without monthly payments.
5. Consider debt settlement
Debt settlement companies negotiate with creditors to accept less than you owe on unsecured debts such as credit cards. Creditors do not have to agree, and many major firms charge 15% to 25% of enrolled debt. The process may also involve stopping payments while fees, interest and credit damage accumulate. Settlement can help when repayment is no longer realistic.
If you have $15,000 or more in debt, National Debt Relief is one of the most respected providers of debt relief in the U.S. They have helped more than 1.3 million people, are A+ rated by the Better Business Bureau and are also top-rated by Top Consumer Reviews, Top Ten Reviews, ConsumersAdvocate.org and ConsumerAffairs.
The last resort
If the debt genuinely cannot be repaid, bankruptcy is also worth discussing with a nonprofit counselor or attorney. The right choice depends on what you owe, what you earn and what you own.
Add a Comment