Security Corner Blog

After several years of high inflation, many Americans are still feeling the financial strain. Despite some signs of economic cooling, essentials like food, gas, and housing remain costly. As a result, consumers are increasingly relying on credit cards to make ends meet—leading to an average credit balance of around $8,000.¹ With credit card interest rates averaging 22%—and some retail cards exceeding 30%—carrying a balance can quickly become overwhelming.²

When debt starts to pile up, many people look for ways to regain control of their finances, such as debt consolidation, balance transfer cards, or credit counseling. While some debt settlement programs can provide relief for those nearing bankruptcy, it’s important to choose reputable organizations and avoid scams that can worsen financial stress.

Below are four red flags to watch out for when seeking debt relief so you can make secure and informed financial decisions.

1. Upfront Fees

One of the clearest signs of a debt relief scam is a request for upfront fees. Federal law prohibits debt settlement companies from collecting fees before settling a debt. Legitimate companies will only charge fees after successfully negotiating a settlement with creditors.

If a company asks for payment before delivering results, this is a strong indication of a scam. Instead, look for reputable alternatives that prioritize your financial well-being.

2. No Written Agreement

A trustworthy debt settlement company should provide a clear, written agreement that outlines the services they’ll provide and the associated costs. Transparency is crucial to understanding exactly what to expect during the process.

Avoid companies that are vague about their terms or try to pressure you into quick decisions without documentation. Legitimate companies will provide detailed information upfront and give you time to review before committing.

3. Lofty Guarantees

Be cautious of companies that make broad promises, such as:

• Eliminating all your debt
• Stopping debt collector calls entirely
• Settling your debt for only a fraction of what you owe

Debt settlement is a negotiation—not a guaranteed outcome. While some companies may be able to negotiate favorable settlements, no company can guarantee how a creditor will respond. Be wary of firms that make unrealistic promises, as they may be masking the potential risks involved. Reputable companies will set clear expectations and avoid guarantees they cannot control.

4. Unsolicited Contact

If a debt settlement company reaches out to you unexpectedly—especially through robocalls or high-pressure sales tactics—it’s a major warning sign. Legitimate companies don’t rely on aggressive outreach to gain new clients.

Scammers often use fear and urgency to pressure individuals into hasty decisions. Be cautious of offers that claim you must act immediately or risk missing out on an exclusive deal. Reliable companies will give you the time and information needed to make informed decisions without pressure.

GreenPath: A Trusted Partner for Financial Wellness

If you're looking for legitimate help to manage your debt, consider USSFCU's trusted partner, GreenPath Financial Wellness. GreenPath offers free credit and debt counseling designed to ease financial stress and help you create a personalized plan for success. Their NFCC-certified counselors will assist you in:

• Understanding your financial situation and goals
• Explaining your debt management options
• Providing recommendations for getting out of debt
• Developing a personalized action plan to achieve your goals

GreenPath’s expertise and guidance can help you regain control of your financial future with confidence.

Learn More

The Bottom Line

Managing significant credit card debt can feel overwhelming, making quick fixes or “too-good-to-be-true” offers tempting. Unfortunately, scammers often prey on this vulnerability, offering big promises but delivering little to no results.

By recognizing the warning signs of debt relief scams, you can protect yourself from fraudulent companies and find trusted organizations that truly aim to help. Start your journey toward financial wellness today by connecting with GreenPath Financial Wellness and taking steps toward a more secure financial future.

1 According to the most recent data available from the Federal Reserve Bank of New York and the U.S. Census Bureau. 2 Average Credit Card Interest Rates for the week of January 6, 2025 according to wallethub.com.

Article content is provided for information purposes only.