What Interest Rates Can Credit Counseling Provide?

Credit counseling can help you get lower interest rates on your credit cards. There are a couple ways that they can do this. They can help guide you using self-directed strategies to earn lower interest rates on your own. If you are having financial difficulty, then they can help you obtain lower rates through a debt management plan.

Self-Directed Strategies

If you are trying to obtain lower interest rates on your own, then you can usually only get a drop of 2 to 4 percentage points. To earn lower rates, you must show that you have financial strength. You need excellent credit and you need to show that you can make much higher than minimum payments on a regular basis. If you can do this, then a simple request for lower rates should get you a slight drop in your rates.

Debt Management Plan

Credit counseling can also help you when you are having difficulty making your minimum payments. Maybe you can make them, but you have little money to work with each month. Your high interest rates are causing higher minimum payments.

Credit counseling works to reduce your interest rates and your minimum payments, without extending your repayment period. In fact, you repayment period is generally much shorter. Most repayments occur within three to five years.

The key to lower payments is lower interest rates, and credit counselors have arrangements with most major credit card issuers to allow for interest rate reductions. Creditors actually created credit counseling decades ago so that you had opportunities to get the education and structured assistance to get out of debt while avoiding default.

Unlike a loan, there is no set interest rate for a debt management plan. Instead, each creditor determines the interest rate that you will receive. Sometimes it is a set rate provided to all clients on a debt management plan. Some creditors apply different rates to different types of accounts.

Your credit counselor can help to determine your potential eligibility for these lower rates and payments. In addition, you can get the assistance you need to plan you budget and break free from indebtedness.