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FAQs on Credit Card Debt Help
Can’t I just request lower interest rates on my own?
If you have excellent credit and additional surplus
income, you can earn lower rates directly with your
creditors. If you have high debt balances and cannot afford
to send in extra payments, your creditors know that you are
a higher risk. In turn, they will be unwilling to
honor your
request for lower interest rates.
Why do credit card companies participate in debt management
plans?
Credit card companies created credit counseling decades
ago to provide alternatives to bankruptcy and debt
collections. Your creditors lose money if you default on
your debt. If you have financial need and want independence
from your credit cards, your
creditors are typically willing to participate
with lower interest rates, reduced minimum payments
and eliminated additional fees.
How can my debts be paid within 3 to 5 years with lower
credit card payments?
Substantial interest rate reductions allow for you to
apply more of each payment toward the principal balance,
even though the minimum credit card payments may have
dropped. Your balances actually drop faster than if you were
making normal minimum payments. This amount applied to
principal increases each month as your finance charges
continue to drop. The result is that your
debt is eliminated
within three to five years.
How can lower credit card interest rates also lower my
payments?
Many creditors allow you to make lower monthly payments
through a debt management plan to help you better fit the
payments into your tight budget. They are also typically
willing to lower your interest rates so that you can still
pay off the debt in full within 3 to 5 years. The result is
that your
payments drop as finance charges are reduced.
What interest rates can I expect through a debt management
plan?
The interest rates that you could be eligible for depend
on which creditors you owe, the amounts owed to each account
and the type of account. Interest rates have ranged from no
reduction to 0% interest. Once your creditors grant
benefits, your lower interest rates are locked in for as
long as you make consistent on-time payments. Your counselor
can help you understand
what interest rates
to expect based on your
consultation.
Can some credit counseling agencies get a lower interest rate
or payment than others?
Creditors approve lower interest rates if you qualify and
lower payments based upon your balances and regular payment
amounts. Therefore, one agency cannot
obtain lower rates or
payments than another. If one quote is lower, make sure the
reported balances are correct. Otherwise, you could actually
end up delaying your interest rate reductions and increasing
your minimum payments. Reputable agencies will help you
develop the most accurate plan.
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