The Truth about Consumer Credit Counseling
At Consolidated Credit, we believe in full transparency about the services that we offer.
Here’s the simple truth: Many consumer credit counseling organizations offer the same services, but they are not all created equal. Some agencies for for-profit while others are non-profit. Creditors nationwide work with most of the agencies and have negotiated rates, but you need to use a reputable service that has your best interest in mind.
How non-profit credit counseling works
Credit counseling agencies receive funding from grants and credit card companies to fund educational resources and debt repayment assistance programs to people who are overburden by debt. These companies don’t want customers to get into further trouble and perhaps declare bankruptcy. Charged off accounts aren’t good for an issuer’s books. So, it’s in their best interest to help customers work out their debt problems.
One service that is offered by credit counseling agencies is in a debt repayment plan; it’s known as a debt management program. The counselor works with you to find a payment that you can afford and then negotiates with your creditors to reduce interest rates and accept the new affordable payment.
When you go to a credit counseling agency, you agree voluntarily to enroll in a debt repayment plan; it’s known as a debt management program. The agency finds a payment you can afford to make, then negotiates with your creditors to get their sign-off. They agree to an adjusted payment schedule, as well as to reduce or eliminate the applied interest rates.
A second truth about credit counseling
Technically, you can do all of this on your own – you just have to do it individually for each debt. You can call each creditor and try to negotiate lower rates on your own. The may even agree to adjust the repayment schedule.
That happened to Ronnie. He had several creditors and one agreed to work with him, offering 0% and a repayment plan. Unfortunately, he couldn’t get the same kind of deal from his other creditors.
Long-time, loyal customers of a particular credit card company, with a clean history of no missed payments, usually have more success. However, if you missed payments or fell behind recently, they may not trust you can stick with any repayment plan.
Working with a credit counselor shows your creditors that you’re serious. So, the agency can get you better rates even if you tried and failed to negotiate on your own.
2 ways all consumer credit counseling services are the same.
- In all cases, your initial consultation with a credit counselor should be free. If an agency tries to charge you, it’s a sure sign of the scam.
- Debt management programs are structured the same way, and the main benefit is getting a lower interest rate on outstanding debts. Even debt management program fees are set by state regulations.
We got a great question from Phyllis in Secaucus, New Jersey. She was wondering what our fees were for a debt management program, and we get this question a lot.
Fees vary state by state, as well as the person’s budget, the number of credit cards they have, and the amount of debt they have. The fee amounts can run anywhere from $0 to $69 a month.
The setup fee should be the same amount as your monthly fee, and the fee is incorporated into your monthly payment generally, on most debt management plans. And most credit counseling agencies are pretty standard across the board.
Meaning: As you decide which nonprofit consumer credit counseling agency to work with, cost savings or better plans aren’t factors.
So, what’s the difference between consumer credit counseling agencies?
Basically, if the program is the same and the price is the same, your choice should come down to three things:
You want to work with an agency that has a record of delivering results with the least amount of hassle. It’s also important that you can ask questions and get answers quickly and directly. Finally, they should provide educational resources to help you form better credit habits, teach you how to manage debt and make a plan for financial stability.
Consolidated Credit has been helping people get out of debt since 1993. In 24 years, we’ve counseled 6.5 million people on how to eliminate their debt as quickly and easily as possible.
Alex P. from Miami Lakes, AL
I would like to say Thank you for the outstanding service that you gave me. I started the program just four short years ago and in March I will be debt free. With your help in setting better plans with my creditors I was able to accomplish this. It was hard work, but it was all worth it at the end. The Consolidated credit counselors are the best; they answered all of my question(s) and helped me every step of the way.
Rebecca S. from Somerville, MA
Joining the Consolidated Credit debt management program was the best decision I have ever made! I was in deep credit card debt and was beginning to fall behind on my payments. Consolidated Credit worked with my creditors to lower my interest rates and put me on a payment plan that fit my budget. Now, 3 years later, I'm credit card debt free! Every time I called Consolidated their customer service advisers were friendly and knowledgeable. They calmed my anxieties and educated me about the credit card payoff process. I am eternally grateful to Consolidated Credit for helping me pay off my credit card debt!!
Francine A. from Miami, FL
I couldn't have made a better choice than signing on with Consolidated Credit. Their staff is compassionate as well as professional. I was so impressed with the patience, time and care they took to make me comfortable with my decision. They never pressured me, it took me weeks to decide, but patiently answered all of my questions and let me join in my own time. When I did apply, after completing my own research, I was certain I made the right choice. I have not had any regrets, even the one month I had difficulty I was met with genuine understanding and an offer of education and services to help me continue to manage my credit. The quality of my life during unemployment is so much better than it could be had I not made this decision.
Serena N. from New Orleans, LA
I was hesitant to call Consolidated Credit. However, I took the first step and am so happy I did. My husband and I struggled with aftermath of a hurricane and Consolidated Credit offered relief and a light at the end of the tunnel. The Consolidated Credit agents are professional and also understanding, very easy to speak with and will offer solution to needs. I would highly recommend this to anyone feeling trapped financially.
We also strive to offer everyone free financial resources that help them learn better financial habits.
Consolidated Credit regularly publishes infographics that offer an easy visual way to understand key financial topics. You can understand today’s top debt and credit trends and avoid common challenges like how to avoid debt during back to school or winter holiday shopping.
We have a library of financial education videos that take you in-depth on various financial challenges that consumers face. These videos teach you how to construct an effective budget, how to read your credit report and repair your credit, and more!