The burden of credit card debt is high for many Americans.

In the first quarter of 2023, credit card balances nationwide surpassed $1 trillion for the first time and have remained above that amount since — the most recent Federal Reserve data puts outstanding balances at a total amount of $1.18 trillion.

On an individual scale, balances are high too. TransUnion data shows the average credit card debt per borrower is $6,580, while Experian data puts average balances at $6,730. With today’s very high credit card interest rates, it can take years to pay down that debt.

If you’re dealing with growing credit card balances, you may have come across debt relief options that claim to help lower your monthly payments and eliminate your debt faster — but it’s important to know the risks before you sign up.

Read more: How to pay off credit card debt when your budget is tight

Debt relief or debt settlement companies offer programs to help borrowers get out of debt — usually focused on unsecured debts like personal loans and credit card accounts. These companies negotiate with your lender for a settlement and then charge a fee equal to a portion of the debt.

According to the Federal Trade Commission, debt settlement companies often encourage you to stop making regular monthly payments on your debt. When payments stop, they can negotiate with the lender or creditor to settle your debt for an agreed-upon amount, ideally much less than you would otherwise owe. Over your time in the program, you’ll put money into a savings account, which the debt settlement company will eventually use to pay your lender, often as a lump sum.

Of course, settlements take time, and not every issuer will agree to settle with the debt relief company. You could take on added interest, an increased penalty APR, and late fees for the period you don’t make payments toward your debt. Even if the issuer does agree to settle, you could end up with a higher overall balance from fees and penalties and negatively impact your credit score.

More debt relief details to consider:

• Fees: Debt relief companies may charge you up to 25% of your total debt in fees. Let’s say you want to enroll $6,600 in credit card debt in a debt relief program — around today’s average. That would put your cost for these services around $1,650, on top of paying the actual debt.

• Time: The FTC says the debt settlement process could take years, and you may still receive calls from debt collectors throughout that time. Debt relief company websites say programs can take at least 12 months and up to 48 or 60 months to complete.

• Credit effect: Going through a debt relief program can hurt your credit score. When you stop making payments toward your credit card debt, those missed payments will show up on your credit report. If you continue to not pay, your debt could be sent to collections.

• Taxes: You could owe taxes on any money you save through debt forgiveness when you go through a debt relief plan, since those savings may be considered taxable income. It’s important to speak with a tax professional about what your tax obligation could be after debt relief.

Read more: Credit card payoff calculator

Not every debt relief company you encounter is legitimate. There are plenty of scammers that don’t actually do the work they promise potential customers. The FTC warns: “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.”

Those up-front fees are perhaps the biggest red flag you’ll find among disreputable debt relief companies. If a company is selling its debt relief services over the phone, they’re even prohibited by the FTC from misrepresenting themselves or charging fees upfront before actually reducing your debt.

The CFPB outlines three criteria every debt settlement company should meet before they charge you any fees:

• The company should reach a settlement, like a reduced or renegotiated rate or some other positive improvement for at least one of the debts you owe.

• You should agree to the new terms or plan.

• You should make at least one payment toward the renegotiated debt to your lender.

Because not every lender or creditor will be willing to work with a debt settlement company, these guidelines can help you ensure that you don’t lose more money working with a company that can’t actually help you (though you may still take on added interest and fees). Following these criteria can also help you avoid potential scams and fraud.

And remember: If a debt settlement or debt relief company’s claims seem too good to be true, they probably are. The CFPB warns against debt relief scams that guarantee they can eliminate all of your debt or promise settlement terms up front. Always make sure to research customer reviews and complaints that can help give you a better idea of the company’s reputation.

Related: 6 tips to avoid credit card fraud and scams

Before you consider a debt relief or debt settlement program, consider whether these options could work for your debt payoff journey:

You don’t need to go through a third party to negotiate with your credit card company. Call the number on the back of your credit card and speak with a representative about your options. Explain your financial situation and what you’re able to pay. While nothing is guaranteed, you may be able to score a reduced interest rate or even agree to pay an amount that’s less than what you owe toward the card.

If you have good credit, you may qualify for a balance transfer credit card, which can help you avoid interest for several months while you pay down your existing balance. Balance transfer credit cards today have 0% introductory APR periods lasting anywhere from 12 to over 20 months after account opening. You can consolidate your existing debt onto the card and use the intro period to begin paying down your principal balance. After the intro period ends, you’ll start to accrue interest at the card’s ongoing APR for any remaining balance.

Balance transfers do typically have fees of around 3% to 5% of your transferred balance — but that’s still much less than you’d pay for a debt relief program or in interest charges on an existing balance. Here are a few of our favorite balance transfer options available today:

• Chase Freedom Unlimited®: 0% APR on balance transfers for 15 months (18.99% to 28.49% variable APR after that) and a balance transfer fee of $5 or 3% on transfers made within 60 days of account opening

• Blue Cash Everyday® Card from American Express: 0% APR on balance transfers for 15 months (20.24% to 29.24% variable APR after that) and a balance transfer fee of $5 or 3%

• BankAmericard® Credit Card: 0% APR on balance transfers made within 60 days of account opening for 18 billing cycles (15.24% - 25.24% variable APR after that) and a balance transfer fee of 3% for transfers made within the first 60 days

Read more: What is a balance transfer and how does it work?

Another debt payoff option is taking on a personal loan to consolidate your credit card debt. Debt consolidation loans can help streamline your monthly payments and potentially lower the interest you’re charged each month.

Like any loan, you’ll score the best interest rates with a great credit score — but personal loans can have lower APRs than credit cards. You may also have to pay fees for your debt consolidation loan, like origination fees or prepayment penalties.

Always compare different lenders and the loan terms before you opt in. Make sure the APR, fee charges, and term length align with what you’re able to pay each month.

Credit counseling can be a more cost-effective way to get control of your debt and create a plan to pay it off. Many tools and workshops you can access through credit counseling services are free.

You can work with a credit counselor to create a debt management plan and budget. Counselors may also help facilitate payments from you to your lender or creditor. Unlike debt relief companies, credit counselors don’t typically settle debts with lenders — instead, they may be able to help lower your monthly payments or pay a lower interest rate.

Always make sure to find counselors through reputable, nonprofit credit counseling organizations, such as the National Foundation for Credit Counseling or the Financial Counseling Association of America.

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