Many Americans carry credit card balances, and some may find it challenging to pay them down—especially when unexpected expenses arise. Statistics for the fourth quarter of 2025 from the Federal Reserve Bank of New York show that “Credit card balances rose by $44 billion from the previous quarter and stood at $1.28 trillion….” When used responsibly, credit cards can be a helpful financial tool, but like any form of borrowing, balances can become difficult to manage if they grow too large.

Built-up debt can seem like an impossible burden to manage, especially credit card debt, since card issuers can often charge double digit annual interest rates that can go almost as high as 30 percent. For struggling consumers unable to deal with debt, any company that says it can help them may seem like a financial lifeline. But difficult situations also attract unscrupulous people and companies wanting to exploit an unsuspecting debtor’s money problems and increase their hardship instead of lessening it.

Some companies heavily promote credit card debt assistance services to consumers. Their advertisements may be on television, heard on the radio or a podcast, or seen on the internet. These debt relief businesses may claim to deliver effective results and feature client testimonials, but just how reputable are they? Is it possible that some debt relief agencies may be long on promises to attract clients, but then short on delivering helpful results to them? As with any decision about personal finance, it’s important to be cautious, and do thorough research to try to avoid being taken advantage of by debt relief scammers.

According to the U.S. government agency the Federal Trade Commission (FTC), which helps guard consumers against many types of fraud and other illegal activities, “Debt relief service scams target consumers with significant credit card debt by falsely promising to negotiate with their creditors to settle or otherwise reduce consumers' repayment obligations. These operations often charge cash-strapped consumers a large up-front fee, but then fail to help them settle or lower their debts – if they provide any service at all.”

So how can someone avoid dishonest credit card debt relief companies and protect their finances?

There are clues that a debt relief company is not providing any actual financial relief, but instead may be scamming you

1. The company contacts you before you decide to contact them. Debt relief scammers can be relentless in seeking new victims and may not rely solely on traditional advertising to attract debtors who may be desperately seeking help. That’s why consumers may receive an unsolicited phone call, email or text from a company offering to reduce or eliminate their debt. Be very cautious if you are contacted by a company you don’t know and haven’t approached. It might be prudent not to share financial or sensitive personal information of any kind with a company that contacts you unexpectedly.
2. The company wants payment from you before any work has been done or any positive results have occurred. Reputable providers typically charge only after services are performed. Depending on the circumstances, requiring an up-front payment may be illegal under U.S. laws. According to the office of the state of Minnesota’s attorney general, “Federal rules ban debt assistance companies nationwide from collecting up-front fees before they deliver a service. Before a debt assistance company can collect a fee, it must have resolved at least one of the consumer’s debts, have a written agreement between the consumer and the creditor, and the consumer must already have made at least one payment to the creditor as a result of the agreement. Non-profit agencies and some attorneys, such as those that meet face-to-face with their clients, may not be covered by the rule….”
3. The debt relief business guarantees that you will receive the results you want. Financial situations vary widely, and many factors influence whether debt can be reduced, repaid or forgiven. No company can guarantee specific outcomes, so promises of guaranteed results should be viewed with caution.
4. The debt services company is offering access—possibly on an accelerated basis—to a “new federal or state government program,” but you must pay for that faster access. Government programs are often designed to help consumers who are in trouble without charging them any fees that could make their financial hardships worse. A reputable company should not attempt to charge you a fee for what you could do for free with some time and effort. Also, it is quite unlikely that a company would have the authority or influence to enable their clients to “jump the line” to somehow get ahead of other enrollees in a government program.
5. The debt relief company tries to enroll you in any program or sign a contract without first reviewing your financial situation thoroughly and discussing what options you have, including no-cost options. A company will not know whether its services fit your needs and if it would be able to aid you without a detailed understanding of your specific situation. Also, initial, fact-finding, exploratory discussions with a company should not have any cost. It might be useful for any paperwork the company provides to be reviewed by an attorney that does not work for the company—and that review can happen before any contracts or other documents are signed.
6. The company claims it has “special relationships” with financial companies or judges, that it knows and has experience with people that give it a unique capability to successfully intervene to save debtor money and help repair their finances. Financial companies, attorneys, and judges must follow state and federal laws regardless of their personal relationships, and attempting to request any form of preferable treatment may be unethical or illegal.
7. Some companies claim they can secure significantly better settlement terms than you could on your own. While experienced professionals may provide guidance, outcomes ultimately depend on creditor policies and your individual situation—so overly confident claims should be viewed cautiously.
8. The relief firm tells the debtor to stop paying (and, possibly, communicating with) their creditors, such as credit card issuers, which is likely to only make the problem worse. Without any additional payments, the card issuer company may lose faith in the ability of the card owner to manage the debt responsibly and then may decide to start debt collection efforts instead of other options. Debt collection may also result in other action against the debtor such as a lawsuit. Stopping payments is unlikely to give the debtor any new official legal authority or coercive power to control the credit card company’s decisions and actions.
9. The relief agency advises the consumer that setting up a debt settlement plan will improve their personal credit score. Simply having a realistic plan to pay down the debt does not affect a credit score. Boosting a credit score may require several years of responsible fiscal management, including paying bills on time and managing all debt, including credit card, mortgage, vehicle loan and other debt.
10. Some companies claim debt settlement will stop interest, fees, collections or legal action. In reality, these outcomes are not guaranteed. A debt settlement plan will not automatically prevent other actions being taken against the consumer by a credit card company or other debtors, who may have different approaches to attempting debt recovery.

The U.S. government has practical information and advice for those with burdensome debt

The U.S. government has more information that could be helpful to anyone experiencing credit card or other types of debt problems:

• The FTC has more information and recommendations for consumers on ftc.gov/debt. If you suspect that you’ve encountered a scam, fraud, or unethical business practice with a debt settlement or relief company, report it quickly to the FTC at ReportFraud.ftc.gov.
• According to the website of another U.S. government agency where it discusses its mission, “The Consumer Financial Protection Bureau…implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive.” The financial products the Consumer Financial Protection Bureau covers includes credit cards, and it has advice on debt relief programs for Americans.

Free, confidential, personal financial advice on different topics—including debt management—is available for credit union members from Balance™

Balance™ is a financial education and counseling organization that offers free services to Delta Community members. Some of its services include credit report reviews, debt management, and information on budgeting, money management and home buying.

Visit the Balance™ website to learn about their education and assistance programs. Members can also speak with certified credit and housing counselors to get personalized guidance.

Want to connect with a Financial Coach about your specific situation? Call 1-888-456-2227 to speak with a Financial Coach today.

Note that the services offered through Balance™ are separate and distinct from any business conducted with Delta Community and are not guaranteed by, nor are they obligations of, the Credit Union.