In 2022, the Consumer Financial Protection Bureau reported that Americans spent collectively more than $120 billion in credit card interest and fees that year. With the national average of interest rates on credit cards continually creeping up, that spend is only going to be higher.
If you pay your credit card balance off each month, the average interest rate of more than 23% won’t impact you. But for anyone who does hold a balance—more than 55% of Americans month to month, according to a recent survey—it might be time to kick those credit cards to the curb.
Of course, that’s easier said than done. With high interest rates can come higher monthly payments, making debt harder to pay off as you accrue more interest. And if you make a late payment or miss one altogether, your credit score may take a hit that could potentially be more than 100 points. It’s a vicious cycle, and sometimes we just need some help.
One thing you can do to start paying off your credit cards and reduce your interest rate? Enroll in a debt management plan.
Why a debt management plan?
Debt management programs or plans provide you a set repayment program that comes with several perks, including consolidated payments, reduced interest, and a reasonable timetable to pay it back.
Here’s how it works:
You’ll first want to set up an appointment with a credit counselor, who will help you budget your household bills along with a combined repayment schedule that’s typically 30%–50% less than your current monthly payment. Your certified credit counselor will then reach out to your lenders so you can pay less in interest.
Debt management programs are setup so that you can pay off your debt in three to five years, and the program is flexible—so if you want to pay it off faster, you can.
Even if you have great credit, credit card interest rates are high. A debt management plan can help by reducing and combining your monthly payments, lowering your interest rates, and providing you with the guidance and schedule to pay off your debts.