The end of 2023 marked the third consecutive quarter in the U.S. that credit card debt exceeded $1 trillion dollars—which had never happened before last year. While credit cards can be helpful when emergencies hit or you’re at the grocery store, if you’ve found yourself overwhelmed by a rising balance, you might benefit from credit counseling.
Finding help can seem daunting, but credit counselors are trained to teach you how to manage your money better, help you decide the best option for your immediate situation, and plan for the future. But if you’re unsure whether you could benefit from credit counseling, here are some signs to look out for.
You’re only able to make the minimum payment
While paying the minimum on your cards is definitely better than paying nothing, it can seem like a never-ending pit of repayment—especially with credit card interest rates as high as 24.61%, as of Feb. 15. It’s challenging to pay down debt when you’re unable to pay more than the interest rate each month.
Late or missed payments have become the norm
It’s not the end of the world if you make a late payment once in a great while. But if you’re delinquent on your account past the 30-day mark, your credit score can take a huge hit—as many as 100 points. And making no payment is worse since you’ll soon find yourself the target of debt collectors.
You’re maxed out
If your line of credit continues to shrink until there’s nothing left, you’re in credit card trouble. Not only do you now have large amounts of debt to pay off in addition to your monthly household expenses, but just having high credit card debt can negatively impact your credit score. That’s because 30% of your score factors in your debt utilization ratio. This means if you’re using more than 30% of your available credit, your credit score can be negatively impacted.
You need help managing your finances
To get your debt back under control, one of the first things you need to do is create a budget. But sometimes that’s easier said than done. Through credit counseling, you’ll learn how to make a budget that’s specific to your situation and level up your money management skills.
You want one regular payment
If you’re looking to consolidate your credit cards, credit counseling can help you do that with a debt management program. Not only can your credit counselor work with your credit card companies so you can operate with only one affordable monthly payment, but they are typically able to get your interest rate reduced—often down to 6%–10%. While you’ll typically pay a small $40 fee each month for your debt management plan, you’ll still be paying less while paying off your credit card debt more efficiently and with more ease.
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