Getting lower interest on credit card debt allows you to save money on finance charges and get help with other fees that are costing you hundreds or thousands of dollars each year. These costs can run into the thousands of dollars each year. As you accumulate more credit card debt, your credit score begins to drop. If your monthly payments are barely more than the finance charges, then you might really be in trouble.
There is help on the way. A reputable credit counselor can help you achieve lower interest rates and often even a lower payment on your debts. The key is a little-known program created by credit card companies that reward your consistent payments by eliminating most nuisance fees, lowering your interest rates and helping you with a lower monthly payment.
Nearly all of the largest credit card companies offer benefits to help you with credit card debt, as long as you are willing to reduce your dependence on credit cards. These benefits can include lower interest rates, lower minimum payments, and an end to any late fees, over-the-limit fees and even collection calls that you may be incurring.
They provide these benefits through credit counseling organizations that they also support financially. Accredited Financial Counselors can help you determine if you are eligible for these benefits.
Lower Credit Card Interest Rates
One of the main components of debt relief is getting a lower interest rate on your credit cards. It is true that you can negotiate better interest rates directly with your credit card issuers. However, to successfully receive lower rates on your own, you need to show signs of financial strength.
A high credit score and several months of payments that greatly exceed the minimum payments are normally required to show financial strength. If you currently are carrying more than $10,000 in credit card debt or have a credit score below 675, it may be difficult for you to prove that you deserve lower interest rates on your own.
Reputable credit counselors can help you evaluate your financial situation and discuss the likelihood of getting lower rates on your own. If you need help with making your payments, then you may qualify for a creditor-sponsored debt management plan.
Debt Management Plan
A debt management plan sets up a repayment schedule of fixed monthly payments that are designed to eliminate your credit card debt in full within 3 to 5 years. It takes into account vastly reduced interest rates that most major creditors extend to participants.
Credit card companies typically will grant a lower interest rate on condition that you continue to make the fixed monthly payment on-time until the debt is paid in full. Such interest rate reductions can save you tremendously on your monthly finance charges.
This reduction in interest rates on your credit cards allows you to put more of each payment toward the principal balance of the debt rather than toward the interest. Creditors are willing to provide this interest rate reduction when you commit to getting out of debt by adding all of your credit cards to a debt management plan (some creditors allow one card for personal or business use).
Lower Credit Card Payments
One of the main benefits of a debt management plan besides the lower interest is the willingness of many creditors to accept a lower monthly payment. In fact, it is typical for debt management plan enrollees to pay less per month on a consolidated payment through their debt management plan. This is possible because of the substantial reduction in interest rates.
You can typically pay your debts off faster, at a lower interest rate and with a lower monthly payment by eliminating credit card debt through a debt management plan. Your Accredited Financial Counselor can show you possible options for becoming debt free.