According to MSN Money, 29 percent of American households carry a balance of $1,000 or more on credit cards. However, many families owe much more, which can be stressful. The Federal Trade Commission (FTC) explains that strategies such as working with creditors directly to settle bills, credit counseling programs and debt management may help. However, before getting started on settling credit card debt, it helps to have a few tips.

Working With Creditors Directly

According to the FTC, if you're having difficulty making credit card payments, contact your creditor right away. Creditors may be able to work out an alternative plan, allowing payments to be reduced to fit your budget. Don't wait too long before contacting creditors. Once the debt has been turned over to a collection agency, the credit card company isn't likely to work with you.

Credit Counseling Programs

Another option for settling credit card debt is credit canceling programs. These programs are designed for people having difficulty creating a payment plan or budget. Most credit counseling programs are nonprofit, but don't put your guard down. According to the FTC, some companies charge high fees and might not be legitimate. For a list of reputable credit counseling companies, contact the FTC.

Debt Management Programs

Debt management programs can be helpful for people overwhelmed with credit card debt. With a debt management plan (DMP), you deposit money every month, and the company pays the credit card companies the agreed settlement amount. These programs can take two years or more to complete, depending on your situation.

Credit Card Settlement Red Flags

When seeking assistance to settle credit card debts, be aware of red flags. According to the FTC, programs that charge high fees for enrolling in counseling or debt management programs should be a red flag. Also, a company shouldn't accept you into a program until reviewing your credit situation. Legitimate companies should always offer budgeting and financial management skills, according to the FTC. A company shouldn't ever demand upfront payments, before making arrangements with your creditors.

Source:

Federal Trade Commission: Knee Deep in Debt

Bank Rate: Is Debt Settlement a Good Idea; Leslie McFadden

MSN Money: The Truth About Credit Card Debt; Liz Pulliam Weston