With credit card interest rates at all-time highs (24.66% as of April) and inflation on the rise, paying down your unsecured debt is important for financial stability. Nonprofit debt consolidation agencies may be able to help you pay off your credit cards, medical bills, personal loans, and payday loans for less than over time.
Here’s how working with a nonprofit for debt management can help you:
Pay a Fixed Payment
To consolidate your debt through a credit counseling organization, you’ll be enrolled in a debt management program. This allows a certified credit counselor to work with your creditors to lower your interest rate and consolidate your credit cards into a single reduced monthly payment at a fixed rate. No more worrying about ballooning interest rates or changes to your required minimum monthly payments.
Pay Loans Off Quicker
Debt management plans are designed so that you can pay off your loans in three to five years. No more paying off debt with no end in sight.
Price Transparency
While debt settlement alternatives typically require you to pay 15%–20% of your settled debt, nonprofit credit counseling agencies only charge a small monthly fee of around $40–$50 to cover the costs of the debt management program. Other services, like budget and credit counseling, are provided for free.
A Better Credit Score Alternative
Alternatives like bankruptcy can stay on your credit score for up to 10 years, while debt settlement companies advise you to stop paying on your debt until a settlement is reached, incurring penalties that can impact your credit score. However, with a debt management program through a nonprofit, consistent repayment will help your credit score recover.
Nonprofits are Reputable Organizations
If you see that a credit counseling organization is certified through the National Foundation for Credit Counseling, you’re in good hands. These organizations are required to promote financial responsibility through free credit and budget counseling. They must also follow state and federal guidelines for financial disclosure to maintain their tax-exempt status, ensuring full transparency and a mission-oriented organization.
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