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Why Do Credit Card Companies Participate in Debt Management
Plans?
Credit counseling was created by credit card companies
decades ago in order to provide alternatives to charge-offs. In
order to provide an incentive for distressed cardholders to seek
credit counseling, creditors decided to provide unique benefits
to cardholders that have undergone
credit counseling.
Credit card issuers make money off of finance charges and
fees. They lose money when your account is turned over to
collections or when you file for bankruptcy protection.
Therefore, it is in their best interest to give you a break when
you receive credit counseling and commit to a debt management
plan.
The extent of creditor assistance depends on each creditor.
They establish eligibility guidelines to ensure that those who
most need assistance are granted lower interest rates, lower
minimum payments and a break from fees. Actual benefits are
subject to creditor approval.
The Accredited Financial Counselors at Personal Financial
Network will discuss your financial situation and help you
develop a household budget. You will get a detailed financial
analysis of your debts as well as a personal budget copy to see
how serious your financial situation is. In addition, your
counselor will be able to show you a good faith estimate of a
consolidated monthly payment, number of months needed to
complete repayment and approximate interest savings.
Your approved benefits will frequently be reported directly
to you by your creditors. Many credit card issuers will print
the new interest rates directly on your regular monthly
statement and will acknowledge participation in your debt
management plan. Some will even go so far as to send you a
direct letter to congratulate you on your commitment to becoming
debt free.
Your creditors have a vested interest in helping you
eliminate credit card
debt. Your counselor understands the commitment that your
creditors are willing to make. Contact
one of our counselors today to see how you might be eligible
for lower interest rates on your credit cards. |
