Banks charged an average of 22.15% on credit card accounts that paid interest in the second quarter, up from 21.52% earlier in the year (Federal Reserve, G.19). Americans owed $1.26 trillion on their cards as of June (New York Fed).
At 22%, a $10,000 balance costs about $2,215 a year just to keep. No wonder "debt relief" ads are working overtime. Before you call one, go through these ten points.
The 10-point checklist
1. Do you know exactly what you owe? Every debt, its balance, its APR and its minimum payment, in one list. You can't pick the right fix without it.
2. Have you called your card company first? Some issuers have hardship programs that can lower your rate or payment for a while. It's free to ask.
3. Is this consolidation, counseling or settlement? They're very different products. Consolidation lowers your rate, counseling lowers your payment, and settlement tries to cut what you owe, with real damage along the way. (We broke them down in April.)
4. Are they asking for money upfront? Companies that sell debt relief by phone can't charge you before they've actually settled or reduced a debt (FTC). Upfront fees are a stop sign.
5. Are they guaranteeing results? No legitimate company can promise how much of your debt it will reduce (CFPB). "We'll wipe it out" is a red flag (FTC).
6. Are they telling you to stop paying your creditors? That's how late fees, penalty APR and collection calls start. Know the cost before you agree.
7. Did they reach out to you first? Unexpected calls or texts promising fast debt relief are a warning sign on their own.
8. Have you seen every fee in writing? Setup fees, monthly fees, a percentage of settled debt: get it on paper before you share any account numbers. (More on spotting scams here.)
9. Have you counted the tax? If a creditor forgives part of your debt, the IRS may count the forgiven amount as income (IRS Topic 431). We explained the 1099-C and the insolvency exception in September.
10. Have you talked to a nonprofit credit counselor? Reputable counselors offer free information first and review your full budget before recommending anything (FTC). See how a debt management plan works here.
Run the numbers
What a card balance costs at today's average rate, if you only keep it level:
| Balance | Yearly interest at 22.15% | Per month |
|---|---|---|
| $5,000 | ≈ $1,108 | ≈ $92 |
| $10,000 | ≈ $2,215 | ≈ $185 |
| $20,000 | ≈ $4,430 | ≈ $369 |
Simplified: the Fed's Q2 average for accounts charged interest; interest compounds monthly, so carrying the balance usually costs a bit more.
Fee check
| Option | Typical costs to ask about |
|---|---|
| Personal loan | Origination fee, APR vs. rate, prepayment penalty |
| Balance transfer card | Transfer fee, when 0% ends, rate after |
| Debt management plan | Setup and monthly fees, in writing |
| Debt settlement | Fee share of settled debt, late fees while saving, possible tax |
Do this today: before you call anyone, fill in point 1, the full list of what you owe. If a company won't look at that list with you before charging you, it isn't the right company.
Sources
- Federal Reserve, G.19 Consumer Credit , August 7, 2026
- Federal Reserve Bank of New York, Household Debt and Credit Report, Q2 2026 , August 11, 2026
- Federal Trade Commission, How To Get Out of Debt
- Federal Trade Commission, Looking for debt relief? Here's how to avoid a scam , March 26, 2026
- Consumer Financial Protection Bureau, What is a debt relief program?
- IRS, Topic No. 431, Canceled Debt
Rates, fees and offers change often and depend on your credit and the lender. This article is for general information, not individual advice.