Looking for debt relief? How credit counseling can help – Fox Business | Vette Leader

Nonprofit credit agencies provide free or low-cost financial services to consumers who are struggling to manage their debt or are considering bankruptcy. Here’s what a credit counselor can do for you. (one)

Unmanageable debt with high interest rates can take a heavy toll on a consumer’s finances. It may seem that no matter how much you try to pay back, the balances will just keep growing as interest accrues over time.

According to the Federal Reserve Bank of New York, 10 percent of Americans fear missing a minimum debt payment in the next three months. Defaulting on debt can lead some consumers to consider bankruptcy – and in the worst-case scenario, collection agencies can sue borrowers for unpaid debts, resulting in garnished wages.

If you’re struggling to pay off debt, you may consider enlisting the help of a nonprofit credit counseling agency. Loan advisors can help you create a plan to pay off different types of debt, such as: B. Credit cards, unpaid medical bills, and payday loans.

Read on to learn more about credit counseling and your alternative debt consolidation options. You can compare debt consolidation loan interest rates for free without hurting your credit score on Credible.

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What is credit advice?

Nonprofit credit agencies provide free, low-cost financial services to consumers struggling to manage their debt. Some consumers who file for bankruptcy may need to seek credit counseling as part of their court filing. A credit counselor can help you by:

  • Advice on dealing with money and debt
  • Analyze your finances and create a monthly budget
  • Receive free copies of your credit report and credit score
  • Signing up for a Debt Management Plan (DMP), which may incur monthly costs
  • Negotiating with your creditors on your behalf to lower interest rates and waive late fees

Consumers should be aware that some for-profit debt management companies may masquerade as non-profit organizations. A reputable credit agency should send you free information about the services they offer, according to the Consumer Financial Protection Bureau (CFPB). When a consultant is unwilling to provide this information, it is a red flag.

You can find reputable credit counselors through some trade organizations, such as the National Foundation for Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA). A full list of approved credit counseling agencies can also be found on the Department of Justice website.

To learn more about your alternative debt consolidation options, speak to a knowledgeable credit professional at Credible.

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3 alternative debt settlement methods

Credit counseling is a relatively low-risk way to manage multiple debts, but it’s not your only option. Here are a few other strategies for quickly paying off debt.

1. Debt avalanche or debt snowball

The debt avalanche method involves paying off the debt with the highest interest rate first in order to save the most money over time. On the other hand, the debt snowball method is when you pay off the smallest balances first to jump-start your debt-repayment plan.

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2. Credit Card Balance Transfers

It may be possible to transfer the balance of one or more credit cards to a new account using a balance transfer card at a lower interest rate. Credit card issuers usually charge a fee of 3-5% of the total amount for the final balance transfer.

Some consumers may even qualify for an introductory 0% APR offer, which allows you to pay off your credit card debt for up to 18 months without interest. These promotions are typically reserved for borrowers with very good to excellent credit ratings, which the FICO model defines as 740 or higher.

On Credible, you can compare balance transfer cards from multiple credit card issuers at the same time.

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3. Debt Consolidation Loan

A debt consolidation loan is a type of personal loan used to pay down unsecured debt at a lower, fixed rate. Personal loans are lump sum loans that you pay back in monthly installments over a set period of time, usually a few years.

According to the Federal Reserve, interest rates on two-year personal loans are currently at record lows, meaning there’s never been a better opportunity to refinance your debt at a lower rate. Keep in mind that the interest rate you qualify for depends on your credit rating and debt-to-income ratio.

Pay off $10,000 worth of credit card debt

A recent analysis estimates that well-qualified applicants could potentially save up to $174 on their monthly payments by consolidating their credit card debt into a personal loan. Over time, this can add up to thousands of dollars in interest savings.

If you’re curious about this strategy, use a personal loan calculator to estimate your monthly payments. You can also visit Credible to compare debt consolidation loan interest rates and see if this debt repayment strategy is right for your financial situation.

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Do you have a financial question but don’t know who to contact? Email The Credible Money Expert at moneyexpert@credible.com and your question could be answered by Credible in our Money Expert section.

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