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For millions of retirees, Social Security is the financial lifeline that keeps the bills paid each month. But as sticky inflation forces prices to inch upward on essentials like groceries and utilities, those fixed monthly benefits, which average just under $2,000 per month currently, don’t always stretch far enough. As a result, many older adults are leaning on credit cards to cover the gaps. But with an average rate of over 21%, any credit card debt you carry can quickly shift from a temporary solution to a cycle of minimum payments and ballooning balances.
Dealing with rapidly compounding credit card debt can be tough for just about any cardholder, but carrying high-rate card debt during retirement can be especially stressful, as your income isn’t likely to increase in the future. If you’re in this situation, you may be wondering if there’s a way to get some relief from your credit card bills — and may also wonder whether seeking help could put your hard-earned benefits at risk.
The short answer is that when it comes to credit card debt relief, the solutions that work best for traditional wage earners might not be the right fit for those reliant on Social Security benefits. Below, we’ll detail what to know about qualifying for credit card debt relief while relying on Social Security.
Find out how to get more help with your credit card debt today.
Can you qualify for credit card debt relief while on Social Security?
Being on Social Security doesn’t automatically exclude you from credit card debt relief programs, but your options and how they’re structured might look different compared to someone with a regular paycheck. That’s because many debt relief programs are designed around your total income, expenses and assets, not specifically where your income comes from.
The challenge for Social Security recipients, though, lies in how debt relief companies evaluate eligibility. Most programs assess two key factors: your ability to demonstrate genuine financial hardship and your capacity to make payments toward a solution. Social Security recipients often easily meet the hardship requirement, as fixed incomes that don’t keep pace with inflation create clear financial strain. The payment capacity requirement, however, can be trickier to navigate.
Debt relief providers will typically assess your monthly income and expenses to see if you can afford the payments required to qualify for the options available to you. If they find that you have enough room in the budget to afford those payments, you can typically qualify to enroll.
Some of the debt relief strategies that may be possible to pursue while on Social Security include:
- Debt management: By working with a credit counselor to create a debt management plan, you may be able to roll multiple credit card bills into one monthly payment with lower interest rates and fees.
- Debt consolidation: When you consolidate your debt, you’ll typically take out a new loan at a lower rate to pay off your existing credit card debt.
- Debt settlement: Debt settlement programs (also known as debt forgiveness programs) negotiate with creditors to reduce your overall balance, typically by 30% to 50%.
- Credit card hardship programs: Many credit card companies offer hardship programs that can reduce or suspend payments for a set period or temporarily lower your rate and fees to make your card debt more affordable.
Explore your debt relief options to find the right solution now.
What debt relief options work best for Social Security recipients?
Certain debt relief options tend to align better with the realities of fixed income. For example, debt management plans often work well for seniors on a fixed income because they consolidate payments and reduce interest rates and fees without requiring new loans, credit checks, or meeting strict qualifications.
Debt settlement programs may appeal to those facing severe hardship, as the relief that comes with this strategy can be significant. However, this approach requires you to stop payments temporarily to save up for lump-sum settlement offers, which can harm your credit score and lead to collections calls — a trade-off many seniors aren’t comfortable with.
Credit card hardship programs can also be a helpful option for seniors on Social Security. Many credit card companies are willing to work with retirees to lower or pause payments for a set period, which can give you valuable breathing room while you stabilize your finances.
Debt consolidation may be worth considering as well. However, limited income may make approval tough, especially when it comes to getting approved for the best rates and terms, so other options are generally a better fit for most retirees. And, while bankruptcy has some major downsides, it can also be worth pursuing for seniors with few assets and significant debt.
The bottom line
Trying to manage credit card debt while on Social Security presents unique challenges, but the good news is that your benefits provide a foundation of protected income that many debt relief strategies can build upon. The key is to choose an approach that works with your fixed income rather than against it. If you need help determining what strategy works for your unique situation, it may benefit you to consult with a debt relief expert who can help you understand the approaches that work well for those with limited income.
