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Credit Counseling Does More than Just Lower Interest Rates
Many debtors seek credit counseling for lower interest rates
so that they can get relief from the high finance charges they
are incurring. Indeed, lower interest rates on credit cards may
be the most important benefit that many creditors offer through
credit counseling. There are however some additional benefits
that are often overlooked.
Pay Off Debt Sooner
The lower finance charges on many accounts allow for a much
larger amount of each payment to go toward the actual debt
balance. This allows for you to
eliminate credit card
debt much faster than you typically could on your own. When
your finance charges drop by half on one credit card, your
principal payments could double, triple or increase by even
more, depending on your account. Even a drop of just a few
percentage points could potentially double your principal
payments. As your debt balances drop, the finance charges also
are smaller, which causes an even higher amount to be applied to
debt balances in subsequent months. In most cases, your debt can
be eliminated completely within
three to five years.
Lower Minimum Payments
Many creditors provide an extra boost to your budget by
lowering your minimum
payment through a debt management plan. The drop in finance
charges can be so substantial in some cases that they can give
you a lower monthly payment while still applying higher amounts
to your principal balance.
Such drops in the minimum payment can allow you to pay a
lower consolidated monthly payment as a part of your debt
management plan. A lower payment fits more easily in your budget
and can help you keep your payments on-time and consistent from
month to month.
Eliminate Late and Over-the-Limit Fees
Participating creditors typically will waive future late and
over-the-limit fees once they accept the terms of your debt
management plan. With such nuisance fees ranging from $25
to $39 each, the savings can really add up.
They do this by re-aging the account. This means that once
your debt management plan is accepted, then they will accept
that new low monthly payment each month without requiring that
you repay any arrears. If you are a month or more behind, you no
longer have to double up on payments just to get caught up. Any
fees previously charged will still be a part of your balance,
but you would receive no future late or over-the-limit fees once
you are approved by the creditor for these benefits.
Halt Collection Calls
Once your accounts are returned to a current status,
you will no longer receive any
harassing collection calls
from credit card issuers. Your accounts will be reported as
paying on time as agreed. Some may reflect that you are on a
debt management plan.
Credit card companies will not call you to request payments
once you have been accepted into a debt management plan and are
able to stay current with your payments. As long as you stay
current with your payments, then you should get relief from
those collection calls.
Benefits provided by creditors are subject to their
guidelines. They generally do not change once your plan has been
accepted. If you miss payments, then you could lose benefits.
Talk to your credit counselor about what benefits you could
expect based on your own unique situation.
Give us a call today. |
