Credit card debt forgiveness can effectively eliminate a sizable portion of your debt balance.
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Interest rate cuts are looming again.
After the Federal Reserve resumed the rate-cut campaign it started in 2024 in September, other cuts now seem likely for the central bank's next meetings in October and December. That will potentially offer real relief for homebuyers, homeowners looking to refinance and homeowners looking to borrow from their home equity.
But what about credit card users?
With credit card interest rates hovering around a record high, any relief here will be welcome. But will the Fed rate cuts be translated into real, tangible relief for borrowers? And, against this backdrop, are they better served by exploring their debt relief options instead, especially if credit card debt forgiveness can cut their current balance by half? There aren't clear answers to these questions but there are items borrowers should consider that can help them better determine their next steps. Below, we'll break down three to consider right now.
Start by checking your credit card debt relief eligibility online here.
What borrowers should consider about credit card debt forgiveness and Fed rate cuts this fall
Does credit card debt forgiveness really make sense if Fed rate cuts look increasingly likely? Here's what borrowers should consider:
Fed rate cuts will be done incrementally
Sure, the chances of rate cuts in October and December are currently over 90%, according to the CME Group's FedWatch tool, as of October 22. But even if those cuts are issued as widely expected now, both will just be in 25 basis point increments, combining for a half a percentage point reduction overall (or 75 basis points, including the September cut). That's unlikely to lead to any real, noticeable relief on your credit card debt.
Remember that the average credit card rate is around 21% now. And that's the average, meaning that many borrowers are paying even more on their debt this fall. Cuts that add up to less than a single percentage point, then, are unlikely to be reflected in any real, beneficial way for credit card users.
See what debt relief option could work best for your credit card debt now.
Rate cuts will have little impact on credit card rates
It's also important to remember that the 75 basis point cut noted above isn't likely to be seriously reflected for credit card users, as the Fed's policy has little impact on credit card rates. This was clearly seen in 2024 when credit card rates surged to a record high, directly in the middle of the Fed's rate cut campaign. That's because credit card rates are also influenced by the prime rate.
And, while rate increases are largely utilized by credit card companies to justify increasing costs on borrowers, rate cuts aren't reflected in the same way. In other words, it will take multiple, substantial rate cuts for credit card companies to justify reducing rates to their users, neither of which seems likely this fall.
Your interest is still compounding in the background
Compounding interest on credit cards is often one of the key reasons why it becomes so difficult for borrowers to dig out of debt. Interest is charged every day after the grace period has concluded, making even manageable balances quickly prohibitive if not dealt with. So waiting for the Fed to take action or for the economy to improve in such a way that negates this reality simply doesn't make sense.
And with debt relief options ranging from forgiveness to management programs to credit counseling and debt consolidation loans all readily available now, many borrowers may be better served by taking a proactive approach to the debt that's compounding at a double-digit interest rate.
The bottom line
Credit card debt forgiveness needs to be seriously considered now. With Fed rate cuts expected in just minor amounts in the final months of the year, those cuts are expected to have little impact on credit card rates (if they're even issued), and the reality of compounding interest humming along in the background, a proactive approach to your credit card debt may be required. Just be sure to compare your debt forgiveness options against all of your other credit card debt relief solutions to determine which makes the most sense for your unique circumstances. And consider speaking with a representative from one of the top debt relief companies who can answer your questions and help tailor an appropriate strategy.
Edited by Angelica Leicht
