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How to Know if You Could Benefit From Credit Counseling

While credit cards have a purpose, it’s also easy to rack up the dollars. In fact, American credit card debt is the highest it’s been since the Federal Reserve began tracking it in 1999. If you know your credit card debt has become hard to manage, you might benefit from credit counseling.

Only you can decide if credit counseling is right for you, but if you’re unsure if it’s the right decision, here are some signs you might be ready to get help.

1. You can’t pay more than the minimum amount

While it’s good to consistently make payments, paying just the minimum can, unfortunately, be slow going—especially with sky-high credit card interest rates (24.61% as of Feb. 15). To really make a dent, you’re going to have to budget more money to put toward your credit cards.


2. You’re making late payments (or missing them all together)

While a late payment doesn’t immediately mean your credit score is going to tank, if you’re 30 days overdue, your credit score can plummet by as many as 100 points. Missing payments completely will ensure your score takes a significant hit—one that can be hard to come back from.


3. You’re using more than 30% of your available credit. 

Your available credit versus your balance is called a credit utilization rate. This means your credit score can take a hit when you go over that 30%. That’s because your credit utilization is worth 30% of your credit score, so it’s not something to overlook.


4. You want to make a budget but need help.

When you make an appointment with a credit counselor, they’ll go over your household expenses and help you make a budget that works for your specific situation. They can also provide literacy education and teach better money management skills. 


5. You want to consolidate your loans or lower your interest rate.

Between high interest rates and multiple credit cards, it can be challenging to get a good foothold in your debt. If you enroll in a debt management program, your credit counselor will work with your credit card companies to reduce your interest rate and consolidate your credit card debt into one affordable monthly payment. While there’s typically a small fee of about $40 per month to cover the costs associated with the management of your plan, you’ll save money in the long run and pay your money off more quickly.


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