Credit Counseling Can Teach You How to Stop Using Credit Cards Today

Ronnie pays off $50,000 in credit card debt and swears off credit cards.

Seventy-two percent of Americans use credit cards and Ronnie P. used to be among them. He liked the advantages his cards offered, along with the ease and convenience of swiping; until one day Ronnie realized all the swiping had ballooned to over $40,000 in initial credit card debt.

Credit card debt problems start slowly, but often hit you suddenly…

Credit cards can be a useful tool. However, they also allow you to build debt in a way that can be unhealthy for your finances. High interest rates eat up minimum payments, meaning you only decrease your balances slowly. At the same time, you keep charging.

So, those high interest rate balances slowly climb even though you make payments every month. Then, it hits you one day how much you owe. That’s what happened to Ronnie:

“You realize belatedly that it came on slowly – sort of piece meal. But suddenly one day, like an epiphany, it dawns on you how much trouble you’re in.”

“And then you think back and you realize it was this, this and this. In our case, it was mostly home renovations.”

Ronnie diligently made at least the minimum payments on time each month to remain in good standing and avoid penalties. Still, despite making consistent payments, the principal on Ronnie’s debt barely budged.

He did research to find a better way out of debt…

Ronnie says extensive reading taught him a few lessons about why he couldn’t pay off his debt effectively just paying the minimum due or even just a little more each month.

“The credit card companies are happy to just rock along that way. As long as you’re making payments – even if it’s the minimum or whatever – that’s okay for them. But I couldn’t go on that way.”

Ronnie took the right first step and called his creditors directly…

Ronnie determined his high interest rates would keep him in debt longer than he cared to be. He also knew those rates were the reason his balance never seemed to go down. So, Ronnie took a good first step and called his creditors to negotiate lower interest rates and work out a repayment plan.

“I had some success on my own calling Chase; it went pretty well. They froze the account and dropped our interest rate to 0 percent.”

The challenge is that different creditors have different policies about working with customers to pay off their debt. It also depends on your history with them.  If you use the account frequently and you always pay on time they may be more willing to help you. In this case, Chase worked out a customized repayment plan with Ronnie. However…

“I tried to negotiate with another creditor, but they were only willing to lower my interest rate to 15%.”

An ad with a possible solution caught Ronnie’s attention…

One summer day in 2013, a Consolidated Credit ad caught Ronnie’s attention – in particular, a claim to lower interest rates. He picked up the phone and made the call.

He called and spoke with a certified credit counselor…

“There was a very helpful lady, I think her name was Sheila. She was so knowledgeable and so very helpful. She really was good. She tells it like it is. She knew Consolidated Credit could help and she just spelled it out step-by-step.‘’

“Sheila had a sympathy for the problem and an understanding of how to address it. I was won over almost immediately. She emailed me the paperwork and Consolidated Credit basically took it from there.”

Sheila helped Ronnie enroll in a debt management program…

“After speaking with Sheila and signing on to the debt management program I was greatly relieved.”

Consolidated Credit went right to work on Ronnie’s behalf:

1. They contacted his creditors to negotiate lower interest rates
2. They also consolidated his multiple monthly bill payments into one monthly payment.

As Sheila explained, instead of juggling multiple payments from multiple creditors, Ronnie would make one payment to Consolidated Credit. They paid his creditors off according to the negotiated repayment schedule. Ronnie could use Consolidated Credit’s online client portal to track the progress as his balances went down.

Consolidated Credit got results where Ronnie couldn’t…

Creditors are often more willing to negotiate and agree to an adjusted repayment schedule when you go through credit counseling. Working with a credit counselor shows creditors that you’re serious about paying off your debt.

“When I negotiated on my own one creditor would only gone down to 15%, but Consolidated was able to get 5 or 6%. It was half of what they were willing to do for me alone. So, I ended up paying one quarter of the original interest rate.”

Consolidated Credit contacted each creditor to negotiate lower rates and an adjusted payment schedule. More of Ronnie’s creditors agreed to drop their rate to zero. The credit counseling team helped Ronnie set up a repayment plan.

“It was immediately a relief. That was proven more and more as the months passed and I could see the balances shrinking.”