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Credit Counseling

Credit counseling services are becoming more common as people try to find ways to manage their increasing debt load.

Credit counseling is a process where you work with an agency to become educated about credit management, develop a plan to repay your current debt and create a spending plan for the future. Many credit counseling agencies will structure a program where you send one payment to the agency, and the agency will pay many of your monthly bills for you.

Some benefits of credit counseling include:

  • Help with reducing / waiving finance charges on your credit cards
  • Expert advice with debt management
  • Consolidation of bills into one monthly payment.

How much does credit counseling cost?
There are typically two types of costs associated with credit counseling:

  1. Enrollment Fee: This fee is to start the credit counseling process. Some credit counseling agencies charge a flat enrollment fee (typically under $50) while some will charge the first monthly debt management payment as the enrollment fee (which will depend on your financial situation).

  2. Monthly Maintenance Fee: The monthly maintenance fee will be an ongoing fee that the agency will charge to provide education and debt payment support. This fee will either be a flat monthly fee or a percentage of your monthly debt payment you make to the agency. Depending on the agency, this fee can be based on the number of credit card accounts you have ($3 - $7 per account), a flat monthly fee or a percentage of your monthly debt payment to the agency.

Since the quality of your credit counseling will depend on the people working at the credit counseling agency, ask many questions. If you are not comfortable with the answers you receive, contact another credit counseling firm.

Credit.com offers a service that can help you manage your debt. Click Debt Counseling - Debt Help to learn more.

Section Topics

Credit Counseling     Debt Consolidation


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