Suzi and her husband learned to control their credit, instead of letting it control their budget.
The lack of financial literacy education in the U.S. is a huge problem for people. Most kids don’t receive any education about personal finance in school and those that do say that it didn’t cover what they needed to know. Unfortunately, that means you’re left to figure out on your own what they didn’t teach you in school. As a result, adults often struggle to successfully manage their credit and finances. It’s a situation that Suzi says led her and her husband into a mountain of debt, and it’s a common thread in people who face challenges with debt
Like many, Suzi’s challenges with credit cards started in college…
Many Gen Xers remember being targeted by credit card companies the minute they stepped on a college campus. You’d walk through the breezeway your first week and get bombarded by credit card reps pushing you to sign up.
That’s exactly what happened to Suzi, and like many students, she simply didn’t know what she was getting herself into.
“No one ever warned me of how debt works beyond ‘you charge it, pay the bill.’ I frivolously spent money in college and paid the minimum balance. I knew there was interest involved, but never know how interest compounded.”
That’s a big problem with credit cards because the interest compounds daily. Each day you carry a balance, and that balance grows a little more with interest added. Those interest charges can mount quickly. Think about it this way, at 20% APR, which is normal nowadays, credit card companies tack on $1 of interest charges for every $5 you charge on the card.
Try It Now: How Much Interest Do You Pay?
In her marriage, credit cards offered an easy way to “fill the gaps”
Suzi got married shortly after college and says her husband didn’t have much knowledge of how credit worked either.
“All we knew was that we were poor and had credit cards to “fill the gaps.” When we got married, I remember calling Discover and pleading with them to raise our credit limit so we could go on a 3-day honeymoon trip three, hours away. Of course, they obliged at 20% interest.”
Suzi says those types of bad choices are what led them to amass $23,000 in credit card debt.
The thought of being renters for the rest of their lives was motivation…
The turning point for Suzi and her husband was when they totaled up all the money they’d spent on rent.
“We wanted desperately to buy a home that was our own. We’d paid over $30,000 in rent at that point in our lives. We just wanted to have something that was ours. But we couldn’t because of our debt.”
Like any savvy person, Suzi turned to the ultimate authority to find a solution. She Googled to look for ways to get out of high-interest debt. That’s when she found Consolidated Credit.
She got on the phone with a certified credit counselor. The counselor helped her set a realistic budget with a consolidated monthly debt payment they could afford. The counselor told her that Consolidated Credit’s team would work with her creditors to reduce or eliminate interest and stop penalties on Suzi’s four credit card accounts.
Suzi and her mother had their doubts…
“Honestly, when I found Consolidated Credit, I really thought it was a scam. I thought it had to be too good to be true. I remember calling my mom and embarrassingly telling her that I just gave them all of my information. She was wary as well.”
This kind of doubt is only natural. Many times, people that come to Consolidated Credit have tried to consolidate debt on their own or negotiate with their creditors. They just don’t get the same results that they get once they call Consolidated Credit.
That’s because as a nonprofit credit counseling service, we have an established process that helps credit card company customers pay their balances. It works by minimizing interest and penalties. That way, you pay down the actual balance owed much faster than you can when you’re facing high APR and late fees.
“The kicker was the lower interest rates that Consolidated Credit was able to negotiate for me. On my three store cards, I was able to get 0% interest. I know! That’s phenomenal and on most cards, it was a 20-plus-point drop. My Discover card was negotiated at 6% interest, which was still a significant drop.”
Suzi trusted the process and watched their progress…
Even after Suzi’s creditors had agreed to drop her rates and penalties, Suzi still wasn’t convinced. But a customer service rep offered some advice that put her mind at ease.
“I was encouraged by a customer service agent to check the credit card websites to be sure that my payments went through to the companies monthly. And sure enough, come the 15th, everything went out and was paid as it should be.”
That’s one of the biggest differences between Consolidated Credit’s debt management program and other options. For instance, with solutions like debt settlement, creditors don’t agree to the program and they don’t get paid every month. You can pay into the program and then your creditors may reject the settlement offer. You could ruin your credit and face collections, lawsuits, and wage garnishment.
With a debt management program through Consolidated Credit, your creditors know in advance that you want to enroll in the program. They agree to let Consolidated Credit act as the go-between and for you to pay your debt back on an adjusted schedule. And since they get paid back in full, you avoid those negative items in your credit you get with other solutions.
For Suzi, it was great to have a team working with her and supporting her every step of the way.
“The customer service representatives were with us throughout the whole process. They texted me to remind me of my 3-month check-ins and were there to answer any questions.”
She and her husband found an interesting way to celebrate freedom from debt…
“At the beginning of this year, we were given a once-in-a-lifetime opportunity to purchase the funeral home in our town where my husband has worked for the past eight years. That really added a whole other level of urgency to pay off our debt.”
Suzi and her husband reworked their budget and dipped into the emergency fund they’d been able to continue building while they were enrolled in the program.
“We pinched pennies and went into our emergency fund to pay off our accounts at once.”
That’s another benefit of the program. You’re not tied down to the payment schedule. If you get some extra cash, you can make extra payments on your accounts. Just call the customer service team and they’ll help you set everything up.
Once Suzi and her husband were free of credit card debt. They celebrated by buying that funeral home in their hometown.
Suzi has a house, a hometown business, and some advice…
Now that Suzi is debt-free, she’s passing on the wisdom she wished someone had shared with her much earlier.
“Only get a credit card when you can truly understand the potential consequences. Never make a minimum payment and learn healthy, credit-building habits young.”
If you’re looking to build healthy credit habits, we invite you to visit our free Financial Resource Center. You can find all the resources you need to build credit and resources for kids and teens to help them build healthy financial habits, too!
Talk to a certified credit counselor to get the right plan to pay off your credit card debt.
