Minimum credit card payments are rising: How to tackle your card debt now

Americans are increasingly struggling with their credit card debt, with the number of cardholders making minimum-only payments painting a concerning picture of consumer financial health. According to a recent report from the Federal Reserve Bank of Philadelphia, the share of cardholders making only minimum payments reached a 12-year high in the third quarter of 2024. During that time, about 11% of cardholders made just the minimum payments on their card accounts.

This troubling trend coincides with record-breaking credit card balances, which surged during the last two quarters of 2024. Perhaps even more concerning, though, is the dramatic rise in revolving balances, which reached $645 billion during Q3 of last year and coincided with an uptick in seriously delinquent credit card payments. This indicates that consumers aren't just spending more; they're also carrying larger balances from month to month and paying less of their total debt. 

As a result, many cardholders are now looking for debt relief solutions to try and regain their financial footing. And, there are a few different options worth considering now that minimum credit card payments are climbing.

Speak to a credit card debt relief expert about your options today.

How to tackle your credit card debt now

If you're being weighed down by credit card debt, the following solutions could help you get back on track:  

Credit card debt settlement

Debt settlement is a strategy where you negotiate with your creditors to settle your outstanding balances for less than what you owe. This option is typically used by cardholders who are already behind on payments and are facing significant financial hardship. In these cases, creditors may agree to a lump sum payment that is lower than the total balance because they would rather receive some payment than risk the borrower defaulting entirely. 

While you can try and settle your debt on your own, many cardholders opt to work with a debt relief company during negotiations. Doing so can increase your chances of a successful debt settlement negotiation — with many cardholders ultimately paying between 30% to 50% less than their original balance to settle their accounts. 

But while debt settlement can help reduce what you owe, it also comes with risks. Settling your debts for less than the full amount can negatively impact your credit score and there may be tax implications related to the forgiven debt. Some creditors may also refuse to negotiate, forcing you to find an alternative solution. 

Find out more about your debt relief options here.

Debt consolidation

If you're still current on your payments, debt consolidation could be a smart solution. This option allows you to combine multiple debts into a single loan with a lower interest rate, making it easier to manage your payments and potentially reduce the amount of interest you pay over time. 

There are two primary ways to consolidate debt: through a traditional debt consolidation loan or a debt consolidation program.

• Traditional debt consolidation loans: These loans are offered by banks, credit unions or online lenders and are used to pay off high-rate credit card debt. The goal is to secure a loan with a lower interest rate than your current credit cards, which can help you pay off debt faster and more affordably. Getting approved for a consolidation loan typically requires a good or better credit score, steady income and decent overall financial health, though. 
• Debt consolidation programs: If you don't qualify for a traditional consolidation loan, a debt consolidation program through a debt relief agency may be an alternative. These programs work similarly to traditional debt consolidation loans but the loan is issued through one of the debt relief agency's third-party lender partners — and the big benefit is that the lending parameters tend to be less strict. You'll still have to meet certain criteria, but you could be approved with a slightly lower credit score or other minor credit-related issues.

Credit counseling and debt management plans

Credit counseling services are another option worth considering, especially if you need more structured help with your debt. These services provide comprehensive financial guidance and can help determine the best debt relief strategy for your situation. During an initial consultation, the counselor will review your financial situation, create a budget and recommend appropriate solutions — typically at no cost.

For those struggling with credit card debt, counselors may recommend a debt management plan. These plans consolidate your credit card payments into a single monthly payment while working with creditors to reduce interest rates and eliminate fees. Debt management plans typically last between three and five years and include ongoing support from your counselor. While they require closing credit cards and paying monthly administration fees, they also help you get rid of your debt without the credit score damage associated with debt settlement.

The bottom line

If rising credit card balances and late payments are making it difficult to manage your finances, exploring your debt relief options can provide a path toward financial stability. Debt settlement, debt consolidation and debt management each offer different benefits depending on your situation. But no matter which route you choose, make sure you also address the root causes of your debt so that you can regain control of your financial future without repeating the same patterns.