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Need help managing credit card debt? Be aware of red flags and dishonest companies

Verify if debt management companies are legit in State of Colorado registry
Do your research when seeking help for credit card debt
Posted at 5:00 AM, Jan 06, 2022
and last updated 2022-01-07 11:31:56-05

COLORADO SPRINGS — After an expensive holiday season for many families, consumers are now scrambling to manage large amounts of credit card debt carried over from 2021. News5 takes a deep dive into the numbers and why having a plan to manage that debt is so important.

Last month, the National Retail Federation said one out of three shoppers still hadn't paid off holiday debt from 2020. So when you add-on the credit card debt from 2021 many consumers need a plan to pay it all off, but you'll want to be smart about who you work with.

"It was so easy. I had pretty good credit. So I was getting credit cards left and right. It just got out of hand," said Jackie Upshaw.

Upshaw is one of many Americans seeking professional help to try to get out of credit card debt. Paying the minimum wasn't helping her dig out of a $22,000 hole from using 18 different credit cards.

According to Wallethub and other consumer research, U.S. consumers were already dealing with $951.6 billion dollars in credit card debt prior to the holiday season. That's up 2.9% from 2020.

The average credit card balance for a Colorado consumer was $6,416.

Craig Carnick is a (CFP) Certified Financial Planner in the Pikes Peak Region.

"A bad use of credit is just to pile on more to what's already been piled up in debt and then to let that ride," said Carnick.

But piling on is what many consumers may have done during the holiday season. Wallethub estimates $70 billion will be added to that national credit card debt total after holiday spending on gifts, travel and entertainment recently.

Lending Tree believes roughly one in three Americans (36%) took on debt averaging $1,249.

"Get the good advice from an impartial source. We recommend a non-profit credit counseling organization," said Carnick.

That's what Upshaw did and now she's paying down her debt.

There's no shame in owning up to the fact, alright I went a little far overboard. Now I've got this debt and I need to figure out how to pay it off," said Upshaw.

Financial experts are issuing this warning. They suggest consumers be careful about who they trust and who they pay when it comes to managing debt. Both fraudsters and businesses with questionable ethics are lurking, especially this time of year.

Credit counseling companies are an option for those looking for help managing their debt and sticking to a budget, but consumer experts say it's critical you make sure the service is licensed with the state to avoid trouble.

Financial experts say in Colorado they aren't surprised to see many people may need help managing credit card debt in our state.

"It is a problem to get it paid-off and I can see why Colorado would have perhaps more than other states because we do have a large amount of people in the hospitality and the service industry that are low paid individuals," said Carnick.

These are the red flags the experts say to look for and avoid when seeking credit card debt help:

- Try to avoid companies claiming they'll settle your debt for pennies on the dollar and any company that advises you to stop talking to and paying your creditors.

- Also, avoid companies asking for an upfront fee, to improve your credit or make your debt go away

Some consumers may be wondering, what about a balance transfer to another credit card with no interest? Many of us get those offers through the mail on a regular basis.

The experts tell News 5 if you pay your balance down right away it's a great option, but in most cases people won't do it and once that no interest grace period is gone you'll be in big trouble paying a lot more. So you have to be careful with those deals.

To help you research debt management companies before you hire them, you can check to see if they are registered with the State of Colorado

You can also check to see if the company has any complaints

Contact information for those with questions or concerns:

Colorado Department of Law
Consumer Protection Section, DM
Ralph L. Carr Colorado Judicial Center
1300 Broadway, 6th Floor
Denver, CO 80203
dm@coag.gov

Consumer Complaints & Registration:
(720) 508-6012
Fax Number:
(720) 508-6033

If you'd like to contact financial expert Craig Carnick's office for advice you can find that information here: https://transformwealth.com/your-team/craig-e-carnick/