2 Troublesome Reasons You Need Credit Counseling Services

When Hi-Rate and Hi-Pay team up, it can be impossible to get them off your neck alone.

When you have credit card debt, there are two reasons you can’t pay it off effectively. We dubbed them Hi-Rate and Hi-Pay.

Here’s why Hi-Rate is a problem…

Credit cards have much higher interest rates than other types of credit you encounter, like mortgages or auto loans. At a 15% interest rate, roughly half of each minimum payment you make covers accrued interest charges; at over 20% APR that jumps to two thirds of every payment.

So, even though you pay every month, you never seem to get anywhere because Hi-Rate eats up those payments. This is especially true you’re still adding charges to the balance you want to eliminate. With so much of each payment eaten up by Hi-Rate, it often feels like you take one step forward and two steps back with your debt.

Using credit counseling services stops Hi-Rate from eating up over half of each minimum payment you make

Here’s why Hi-Pay is a problem…

Hi-Rate isn’t always a problem on his own. In fact, if you manage debt carefully you can cut him out entirely. If you start a billing cycle with a zero balance and pay off charges in full at the end of the month, interest charges don’t apply. Hi-Rate only gets to eat when you carry balances from month to month that feed interest charges.

However, when Hi-Pay comes along, he makes it impossible to get rid of them. Credit cards are revolving debt. That means the monthly payments change based on your balance. When you overcharge, the payment requirement increases. Unfortunately, even though you pay more, interest still eats up the bulk of each payment.

So, as your balances increase, you spend more and more income but you don’t eliminate your debt. Instead, Hi-Rate and Hi-Pay just drain your funds and leave you financially exhausted. They’re why debt sucks.

How Consumer Credit Counseling Services Offer the Cure

Once your balances reach a certain point, getting out of debt on your own becomes a struggle. You can try accelerating how fast you pay off your debts by paying more. You have two options:

  1. Add extra cash on top of the minimum required payment each month.
  2. Set the largest fixed payments you can make on your budget.

However, in both cases, it will still take lots of time and money to eliminate your debt. Here, try out minimum payments and these two options with our debt calculator. See how long it will take to pay off just one of your credit card balances.

Note: If you don’t know your payment schedule, select 2%; that’s standard in the industry.



So, paying off these debts one at a time on your own isn’t efficient or effective. This is where consumer credit counseling services come in to provide the financial cure you need.

Here’s how it works:

  1. A certified credit counselor evaluates your debt, credit and budget to see where you stand with debt.
  2. Then they provide a list of cures that can work in your situation.
    1. Some solutions you may be able to use on your own, such as qualifying for a debt consolidation loan.
    2. However, if you can’t eliminate your debt on your own, they can help you enroll in a debt management program.

This is why you need professional help…

Do-it-yourself solutions like debt consolidation require good credit; they also don’t work as effectively with high volumes of debt. If you have tens of thousands of dollars run up on credit cards, it can take years to pay off. There’s also a danger of running up new balances after you consolidate. You can end up with more debt, instead of less.

If you go through credit counseling services, your accounts freeze when you enroll in the debt management program. The counseling team helps you balance your budget so you learn to live without relying on credit.

The other advantage you get with credit counseling services is the ability to get your creditors to work with you. In truth, credit counselors don’t do anything you can’t do on your own. When you enroll in a debt management program, they negotiate with your creditors to:

  1. Reduce or eliminate your interest rates
  2. Arrange a repayment plan that works for your budget

You can call your creditors to do the same thing. However, creditors may or may not be willing to work with you on your own. That’s especially true if you’ve ever missed payments or made payment arrangement you didn’t keep. On the other hand, working with consumer credit counselors shows that you’re serious. It’s easier to get your creditors on board.