|
About Us |
Contact Us |
FAQ |
Articles
Reduce Interest and Lower Payments
A debt management plan may be offered when your credit
counselor believes that you a eligible for benefits that are
typically provided by participating creditors. A debt management
plan is a structured repayment program that was initially
created by creditors to help you avoid default. In order to
encourage financially distressed cardholders to complete credit
counseling, major credit card companies offer incentives to
commit to a debt management plan.
Reduced Interest Rates
These benefits can include a reduction in interest rates.
Major credit card issuers routinely provide a much
lower
interest rate when you are active on a debt management plan.
They do this to help you gain on paying down the principal
balance. Once your interest rate has been lowered, it will not
go up unless your repayment schedule is interrupted. In other
words, as long as you keep your payments consistent and avoid
opening new accounts, you are locked into the lower rates.
Credit card issuers do require that you include all of your
accounts in a debt management plan so that you can eliminate all
of your credit card debt. If you need one account for business
use, most creditors do allow one to remain off of your debt
management plan without jeopardizing your benefits.
Lower Payments
Another benefit of a debt management plan is that you are
likely to receive a lower payment. This is not always the case,
but most cardholders pay less per month through a debt
management plan. The reason is that dramatically lower interest
rates allow for a lower payment to be required that would still
pay the debt off within 5 years or less.
Even though your are making a smaller payment, your principal
payments are actually increasing. You save money on finance
charges, which really can help you get ahead!
Benefits for Late Payments
Once you fall behind on your credit card payments, you know
that your minimum payments can skyrocket. They include back
payments plus late fees. In addition, if your account goes over
the credit limit, you may be subject to those fees each month
also.
Most credit card issuers offer to re-age your late accounts
if your debt management plan is approved. What this means is
that you would no longer incur late fees or over-the-limit fees.
Your collection calls would typically stop. In addition, you
would no longer be required to make a double or triple payment
to get caught up. Creditors participating in the debt management
plan could allow a lower payment and declare your account
current again without you having to pay the arrears.
Additionally, a debt management plan can help to reduce your
debt-to-income ratio. This plus the increase in your credit
score can help to rebuild your credit history and improve your
creditworthiness. This can reduce the costs of future loans once
you have eliminated your credit card debt. To discuss how these
benefits could help you, contact one of our Accredited Financial
Counselors and get
credit card debt help now. |
