Credit Counseling Services Help Lower Your Monthly Credit Card Payments

Consumer credit counseling agencies act as an intermediary between you and your creditors in order to establish a set monthly payment plan that your creditors agree to accept, and that you can afford. The method used to get your payments lower than what you may be paying today is simple enough to explain; your banks agree to lower your interest rates, and consolidate all of your payments into just one.

Credit Counseling offers one of the most common and legitimate ways to get your credit card bills reduced and under control with a single consolidated monthly payment.

There are benefits and drawbacks to working with a credit counseling service. And there are qualifications to meet in order to enroll. There are also situations where you would simply not be able to commit to this type of program for debt relief. This is the first of several pieces in my credit counseling article series that will help you establish if you can be a success by consolidating your credit card debts with a counseling agency.

Using the information provided, you will also be able to size up and compare this debt solution with other methods like debt settlement and bankruptcy.

How much can your monthly payments be reduced when consolidating with an agency?

It depends. The CRN debt relief system is designed to help you understand what credit counseling is and how it works. You will need to speak with a counselor to get a direct lower payment quote. You can reach one now at 888-317-8770.

Here are some immediate questions you can answer that will help you get a feel for the affordability of a consolidated payment plan:

  • Assuming you are paying an average of 16% or higher interest rates across your combined unsecured debts, would getting the rates cut in half allow you to continue making your credit card payments while meeting all other monthly bills and obligations?
  • If your interest rates were cut on your major bank issued credit cards, and your payments lowered, would the new lower monthly payment allow you to save money each month in order to start building savings that you can use in an emergency instead of a credit card?
  • Do you have a dependable income and the discipline to stick to your debt consolidation payment plan?

Answering the questions above should help you readily identify whether this service will work for you.

How does credit counseling work to reduce my bills?

You contact a credit counseling service, typically over the phone, and walk through a simple budget analysis with a certified counselor. This will consist of questions about your debts, regular monthly bills, and your income. The counseling agency will have some set criteria they use that will identify which of your accounts can be accepted into the debt management plans they offer. The credit counselor uses their mostly automated system to contact the credit card companies you owe, putting forward a repayment plan. Most of this can be handled in one call to the counseling agency if you are prepared with an outline of your income, and your monthly bills.

Most monthly payment and budget relief you achieve through a credit counseling service will come from lowering your credit card bills, store credit cards, gas cards and medical bills.

All credit counseling services have a formula that is used to qualify your debts for lower monthly payments. This formula consists of:

  • Your credit card balances.
  • Who your accounts are with and what that bank or lenders policies are for lowering your payments through debt management plans offered through a credit counseling service.
  • What money you have left in your monthly budget after your typical monthly expenses are calculated (this is often referred to as discretionary income).
  • Whether you would have too much money left after all of your bills are paid – this sounds odd, I know, but banks do not want to limit their profit from credit card interest by lowering the rate for you – if your income shows you can afford the higher interest rate you pay now.

The national average for lower monthly credit card payments through a credit counseling service is roughly 2% of your account balances that are enrolled in the debt management plan. You can estimate what your lower payments would look like – prior to calling a counselor – using the example given below.

After your normal household bills are paid each month, do you have enough left in your budget to make a monthly payment of 2% of your combined unsecured credit card balances? If so, you are a good candidate for credit counseling.

Watch this brief video about what credit counseling is and how it works:

Who is the best candidate to work with a debt management company?

These debt management companies are most effective with helping you pay back debts when you are:

  • Current with your creditors, but you’re struggling to keep up with minimum monthly payments.
  • You are behind with payments to creditors, but only by a few months.

Credit counseling is not ideal when you are already dealing with third party debt collectors and debt buyers. Many collection agencies and debt purchasers do participate in credit counseling repayment plans. But working with a debt management company if some, or all of your accounts are in collections, may not be a good idea. You can learn about other methods to deal with collection accounts throughout this site and our free online debt relief system.

What to Expect from a Credit Counseling Company:

Four immediate benefits to working with a credit counseling company for someone struggling with credit card bills could include:

  • Creditors often waive late payment penalty fees.
  • Interest rate reduction
  • Minimum monthly payment reduction
  • You will no longer make direct individual monthly payments to the creditors that are part of your debt management program. You will make one fixed and easy payment to the credit counseling agency. The credit counseling service then breaks out individual payments to your creditors.

Your monthly payment is set up as an auto draft from your personal bank account for the same day each month.

You will typically continue to get your normal monthly credit card statements in the mail. This allows you to verify the payments are being made on time and to see that the bank is applying your payments according to the plan you set up with the credit counseling company.

How long do these consolidation programs last?

Your debt repayment plan using one of these debt consolidation programs will typically last 4 to 5 years. The repayment plans cannot exceed 60 months by design. Your fixed payment is due on the same day each month for the duration of the plan. You cannot miss a payment while paying your debts through this form of consolidation. If you do not make an on time payment you risk losing the reduced monthly payment benefit.

You do have the option of paying more towards your debts on the plan, which would help you finish early. You can also withdraw from the plan at any time and take over payments to your creditors, but you may lose the lower interest rates if you do.

If you are struggling to make your monthly credit card bills due to higher interest rates, but have a dependable income, it is a good idea to talk with a credit counselor and get the information you need to evaluate what benefits you can gain from working with one. Using a counseling service to budget, consolidate, and repay bills can get you out of debt faster than making your current minimum payments on your own.

What kind of fees and costs are there?

There are limits to the fees you can be charged by a credit counseling agency when they are assisting you with a debt management plan. Those limits are set at the state level. The fee is typically going to be less than $50.00 each month. Nonprofit credit counseling services will waive the monthly fees in some instances if you fit a certain criteria.

What do you get in return for the fees you pay the agency?

  • Your creditors agree to the lower monthly payments that you may not have been able to get on your own.
  • This agreement means you don’t get calls from debt collectors.
  • You now have a set payment amount and a set time frame to eliminate your debts that are part of the credit counseling program. You will be out of debt in 60 months or less if you stick to the plan.
  • If you have missed a payment or three already, many creditors agree to re-age your account. This can help the account show current on your credit reports moving forward.

There are many scenarios where the credit counselor will be able to consolidate your credit cards and get a lower monthly payment than you could on your own without the consolidation. The more accounts you have to enroll, the more likely the bill consolidation company pays for itself.

How does consumer credit counseling affect my credit score?

When you enroll in a debt management repayment plan with a credit counselor, your accounts will be permanently closed by the credit grantor. Closing accounts can have a slight impact on your credit score (dropping only a couple points). If you want to be proactive you can close the accounts yourself before you enroll with a credit counseling company.

The accounts that you enroll in the credit counseling plan may appear on your credit report as being enrolled in a managed repayment plan. This does not impact your credit score, but it can affect the way your credit report is viewed by people who look at it in order to lend to you.

When starting out on the plan, it can be difficult to get new credit, and you are encouraged to not open any new credit without speaking to your credit counselor first. As you progress with your credit counseling payments over the course of a year or more, you may be able to qualify for a car loan, student loans – even refinance your mortgage. New unsecured credit card accounts while you are working with consumer credit counseling will be hard to come by. This is not necessarily a bad thing….

It is very simple to establish new credit upon completion of your debt management plan.

How to estimate your lower monthly credit card payments yourself.

As mentioned prior, the monthly payment relief you get from working with a counseling agency comes from interest rate reductions, and the minimum payment concessions that are prearranged with your creditors. Each bank has its own set of criteria for measuring what type of reduction in interest and payment you will get through your enrollment in a DMP. Even though there are differences in calculations from bank to bank, we can still apply some national averages and come up with a rough estimate of what your monthly DMP payment might look like.


You have $22,000.00 in total unsecured debts across 4 credit cards and one signature loan with a finance company.

Using an average of 2.1% of your total 22k debt as your new monthly payment for these 5 accounts, you would pay a fixed $462.00 every month until your debts are paid off in full.

You can quickly add up all of your unsecured (credit cards, store cards, gas cards, etc.), and use the above 2.1% calculation to see how much you could save each month by working with a credit counseling agency. If the amount you calculate is something within your budget, you would want to connect with a credit counselor and go through a full consult in order to get an exact monthly payment quote. In many different types of situations, your payment reduction could be lower or slightly higher than the example of 2.1% given.

Getting all the details.

With so many credit counseling agencies nationwide, finding out if you qualify for a debt management plan, and understanding how all of the details apply to you, is a matter of picking up the phone. The only way to get an accurate monthly payment quote is by speaking with a certified counselor at one of the many agencies you have to choose from. If you would like to learn more about this debt relief option right now, you can call 888-317-8770 to speak with a counselor. 

If you have any question, comment, or concern relating to a credit counseling service or how a debt management plan would work for you, post a comment below for feedback.

Continue on with the CRN debt relief program and part 2 of the credit counseling series: Credit Counseling and DMP Warnings


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  1. christophelabrosse says

    Thanks for this article. I’ve actually been looking for some good credit counseling in Houston to help me out. Any advice on how to find some good help?

  2. West says

    I have 32,000 dollars of credit card debt on 7 cards with Bank of America, Chase, Capital One and GEMB. My average interest rates are 17%, but one of the cards has an introductory rate that will expire next month which will raise my average rates. I am looking into a debt management plan so that I can afford my payments and actually make headway on paying the credit cards off in my lifetime.

    I have been to some credit counseling websites and they all pretty much say the same thing. I have not called and talked with any counselor yet.

    What questions should I ask when I call into one of these counseling agencies and would my situation and credit card debts be a good fit to use credit counseling?

    • Michael Bovee says

      West – Using a credit counseling service in your situation could make good sense. The credit card interest rates in a debt management plan through one of these agencies get reduced to somewhere between 1.7 and 2.5 percent. Those lower interest rates are for the life of the balances as long as you stick to, and make the lower monthly credit card payments on time – all the time.

      If your monthly budget shows you can afford to pay what I estimate would be roughly 670.00 a month (taking the middle of the lower interest rate spread credit counseling companies have to work with of 2.1%).

      Bank of America, Chase, Capital One and GE Money all work with consumer credit counseling agencies, so you will not run into a situation where some of your credit card payments cannot be lowered. Whichever of these credit cards is still on an introductory plan may be a concern, but it falls off the teaser interest rate next month. That card may/may not get included immediately into the debt management plan with the agency.

      Calling a credit counseling agency and going over your credit card bills and other debts, along with your income, and then determining what you can afford to pay to your credit cards, is a simple exercise. The call with a counselor will go quicker if you have all of your bills and payments in front of you. It is not so much a situation where you would pepper a credit counselor with questions. Its more about calling a credit counseling service and getting a quote of how low your credit card payments can be reduced to in a debt management plan, and then looking at whether that is affordable. You would of course want to know:

      Is the agency licensed in your state.
      Do they have a good BBB rating (a complaint here or there is not a deal breaker, any large business gets them, but a pattern of complaints is a red flag).
      Is the credit counseling service a legitimate nonprofit (there are a couple of for profit debt management companies, so nonprofit is not a requirement unless you live in AR, CT, HI, LA, KY, MA, NJ, NM, NY, ND, OK, or WY).

      I hear you on the “pay off credit card debt in your life time”. Credit card companies now place how long it will take to pay them off if you make only minimum payments on their monthly billing statements. Look at yours and you may see the time to pay them off, at your current interest rates, and making only minimum payments, is 15, 20, or even more years!

      The reason most any consumer credit counseling services website is going to say the same stuff – is that they all pretty much do the same stuff. There is not much to making a comparison of one agency to the next. You can reach a counselor at: 888-317-8770.

      Does the 670.00 monthly payment estimate look affordable to you with your current income and other bills?

  3. Paul V says

    I read the post and understand how a credit counseling agency works to help with my monthly bills, but I am wondering if it can help with my situation. I have 7 credit cards. Bank of America is about 7 thousand. I have 2 Chase credit cards that are both maxed out with 18% and 21% interest. Combined the 2 Chase accounts add up to 11 thousand dollars. My Target and Sams Club are each about two thousand. I have a gas card I owe less than a thousand and a Macys card I owe a little over a thousand dollars. My Visa with the Credit Union credit card has a balance just under $4000 and an interest rate under 10%. I want to keep this card. Will a credit counseling service still work with me?

    • Michael Bovee says

      A credit counseling service will definitely be able to help you get your monthly credit card payments lowered with Chase, Bank of America, Target etc. Your Credit Union likely works with credit counseling agencies too, as most do, but with a 10% interest rate on the credit union visa card, the payment will not likely be all that much lower on then it is now. But when you look at all of your credit card bills as a whole, the monthly payment reduction is going to be significant.

      As far as keeping that credit card out of a debt management plan, that is often situational. You will have to talk with a credit counseling service to get into the specifics of keeping an account out of the plan. There are instances where that can happen, like a small business owner who needs to keep something open and active. Even if you include the credit union account, just know that you can use a debit card like you would a credit card for the time you are enrolled in credit counseling. After you finish a debt management plan you can look to reestablish another account with your credit union, or even Chase and Bank of America.

  4. Gk says

    I have a judgement against me for a credit card debt . They have a local attorney that took the case I called the creditor and they informed me that I have to contact the attorney . I am trying to buy a house and can’t use my va loan until I settle this judgement. How do I make a offer and what is a good dollar amount to offer on a 5600.00 debt that is with interest the original judgement was for 4000.00. Can I hire someone to make a offer so it is removed from my credit and the courts. Where do I start?

    • Michael Bovee says

      Gk – This is a thread about lowering monthly bills like credit card debts using a consumer credit counseling agency. No credit counseling services in Pennsylvania, or anywhere else for that matter, make offers to negotiate or settle judgment debts. I wish they would, but that is another topic entirely.

      In order to help you determine what is a good offer I will need more info about the credit card debt and your financial situation. Your follow up comment requested an email, so I will send one with my contact details. You can reply to that email with your number and some times that are good to connect, or just dial me direct at the number in the email.

  5. rory says

    I need help. My husband and I currently owe around 78000 combined in credit cards and he suffered a stroke 2 years ago. We cant pay our bills and already behind 1 month. Our social security benefit together are only 1400 and 425 out of that is paid for his insurance. We hope that we could enroll in a payment program and reduce the debt and payment. I read somewhere that they would close all the accounts which is fine by us. I just hope that i would only need to pay for half of the total owed for 60 months. Please advise and help us.
    Thank you so much for your advise

    • Michael Bovee says

      Working with a nonprofit credit counseling agency, and qualifying for the absolute lowest interest rates, may work. But not if the credit card bills total 78 thousand with monthly income of 1825.00. I would estimate needing around 1300.00 a month if that were the case.

      If you meant 7800.00 as your total credit card balances, your combined monthly payments could get as low as 150-ish. What are your interest rates now, and on which credit cards?

  6. kathleen says

    Dear Michael
    I have citizenship to another country and will be permanently living abroad. I have a judgement against me (Midland Funding) which I complied with, went to court agreeing the payment of 6,298 in monthly payments of 50.00 until 4/30/2015 which a lump sum will be paid.
    I will be unemployed starting 31st of Aug and I will not have a job in my new homeland country but will be going to school which I qualify financially for schooling because my income is so low. SSA early retirement equaling from USD to EUR 567.00 per month. I can not pay this judgement now.
    I do not know what to do. Please advise if you can.
    The Montana Eighteenth Judicial District Court. The attorney’s are Rausch, Sturm etc….
    Thank you

    • Michael Bovee says

      Kathleen – That is a very interesting repayment structure you set up. I do not see that often, though I suspect it will become much more common. Not that it applies to your situation, but if others are interested in reading why I say that, read the article I recently wrote about Credit Counseling Agencies helping more with collection accounts in and out of court:

      For you, the situation boils down to your ability to pay. 50 dollars a month is a really low payment on that size of balance. But a payment is only as good as your ability to afford it. You likely signed a stipulation that outlines your payment agreement. It would also outline what happens if you do not pay. If you live and bank abroad, there is not a whole lot that can be done to collect from you if payments stop. Just know that the balance will still be there, and will grow from the interest rate (set by the court or in the agreement you made). If you do return, you can make payment arrangements. You can also set up a new payment plan from wherever you are when you bounce back financially and have a steady income.

  7. Greg says

    My wife and I are being contacted by CACH , out of NY city. We live in the Buffalo N.Y. area. Cach contacted us about a credit card debt that we have with a sears card. they seem like they are on a fishihg excursion . Who can we talk to in the Buffalo area ? We just want to clear this up.

    Thanks Greg

    • Michael Bovee says

      Greg – If the debt is yours and you want to resolve it, you can call and talk to one of the specialists on this site at 800-939-8357 ext 3.

  8. Jeremy says

    Hey Michael,

    I currently have $14,500 in credit card debt spread out over 3 credit cards. I am not late on any of my payments, but I will be getting married soon. I have really good credit as of now. I was just wondering what do you suggest that I do. Do I try and settle on my own with the credit card companies or talk with a debt counseling service


    • Michael Bovee says

      Jeremy – Are you making only your minimum credit card payments? If so, is that a stretch to do each month? Are you already a dual income household, or will the marriage bring an additional income?

      Those questions will help determine if you can apply a debt roll up payoff plan on your own. See this report:

      If you are struggling with the minimums on your credit cards, what are your interest rates? A credit counseling program can help make your payments more affordable and get you out of credit card debt in a predictable time frame.

      Settling with your credit card companies on your own is advisable only when you are unable to continue to pay on time, but want to avoid bankruptcy. Settling with your bank is covered extensively on this site. I suggest you start here to learn more.

      Post answers to my question in a comment reply and I can help you through a process of elimination of how to manage your debt with these alternatives. It would also help to know what credit goals you have in the next 2 to 4 years. Are you thinking of buying a home, a car, going back to school and need loans to do so?

  9. Julieta says

    Hi Michael,
    After calls from the creditor attempting to collect money from my husband’s debt. He received a letter from credit card debt (DISCOVER) that says: “they have been authorized to proceed with legal action to secure the balance he currently owe. It says that if he does not reply by Sept. 30 by 8 p.m. (Easter time), the account will be forwarded to an Attorney to obtain judgment against him.”
    Last payment he made was on January 2013. The debt, $7,500, is only under his name. We live in Houston,TX.
    I’m worried about this letter. When you stop making payments, my understanding is that it goes to collection. How come he got this letter directly form DISCOVER and not from a collection agency?
    Is this just a strategic to make him pay for the debt?
    What can we do ?

    Thank you

    • Michael Bovee says

      Julieta – Discover cards do get sent to third party debt collection agencies. Sometimes those collectors are law firms who have been authorized to sue. You can read more about working with Discover here.

      Options at this point include trying to get set up on with an affordable monthly payment, either on your own, or through a nonprofit credit counseling agency, settling with Discover if you can pool together the resources, doing nothing if there are no affordable options due to income or budget set backs, bankruptcy, etc.

      Once you read through that Discover post I linked to, post additional concerns in the comments on that page and lets go from there.

  10. Chris says

    Can collection agencies wait 5 years, 2 years before the debt runs out of the statue of limitaions to come after you and start the 7 years all over? I live in colorado and the sol is 7 years.

    • Michael Bovee says

      Chris – Check out the answer to your similar question here. If you have more questions about your current concern post them in that comment thread. It will help the conversation flow better.

  11. Louis R says

    Hi Michael- I was just notified my job will be eliminated in 60 days due to workforce reduction. I am afraid of not being able to find a job quick enough in this economy and fall behind on all my bills. Obviously, I’ll need to priortize whatever money I’ve being given from my last check or savings that I have. With my severance i pay my creditors in lump sums if necessary. Unemployment will not cover all of my bill payments including my high monthly rent. I owe about 20-25k in unsecure debt and most of it to my employer which is among the top retail banks.

    I am not behind on any of my bills, I’ve been consistently paying over the years and my credit is ok. And i don’t want any delinquency to get further into collections.

    Can I negotiate with my original creditors now to reduce my credit card debt before I start being deliguent on my payments or at least reduce the interest on my credit cards?

    Thank you for your time!

    • Michael Bovee says

      Look into consolidating your credit cards into a single monthly payment with lower interest rates (and thereby lower payment amounts) through a credit counseling agency. You can talk to your creditors about any payment reduction plans they have, but if you are current with your minimum payments, most if not all of your banks are not going to have a plan for you. But they regularly work with credit counseling companies. Calls to legitimate nonprofit agencies are free, and you can get an accurate quote of what your payment reduction will be before committing your money.

      If the lower monthly payments are not low enough, it will mean looking at settling or bankruptcy. But either of those is going to impair your credit for a little while, which I read your comment as something you would like to avoid if you can.

      Post an update after you have consulted with a credit counselor.

  12. Sunshine says

    Hi Michael,
    My husband and I want to consolidate our cards, including a Capital One card. However, he has a Capital One business card (in his name only – he is self-employed). Is it possible to close one account but leave one open from the same creditor?
    Thanks for your help!

      • Michael Bovee says

        Credit card consolidation is often used as a synonym for credit counseling programs.

        Have you connected with an agency already? Do you have an accurate monthly payment quote, and know that it is something within your budget?

    • Michael Bovee says

      You can often keep one credit card out of a credit counseling agency repayment plan. Having the one account be with a creditor you have more than one with is doable, but you should talk that over with a counselor live. The fact that it is a business account, and not a personal credit card, could be helpful.

      I can hit Capital One hard on some of their business practices on this site. But they are one of the most fair large banks out there when it comes to the parameters they have used with people working through a credit counseling company.

      • sunshine says

        Thanks for your response! I’m glad that is an option to keep a card out of the program. I have contacted a reputable credit counseling agency here in Austin so I’m waiting to hear back from them so we can move forward.

        • Michael Bovee says

          Welcome. Post an update with how the program looks for you as far as affordability, and whether Capital One balked at having one credit card in, with another left out.

  13. SST says

    Hello Michael,

    I was wondering if you could help me with my debt situation. I am not behind in my payments but I am sick and tired of not having extra cash when I pay all my credit card bills and other bills. I had a very good credit score a little over two years ago and was able to get a mortgage for 3.7%. After we got married though we had to deal with more debt because of wedding expenses and home remodeling.
    We were able to get a personal loan for $20k to settle some credit cards (mainly store credit cards) with interest rates all above 20% with a 12.5% loan which we pay $500/month.
    We now have around $20k on lower interest credit cards but high balances. I was wondering if you could assess if we can save money by getting into a credit counseling service. Here is the breakdown of the cc and personal loan debt:

    Personal loan $17k @ 12.5%
    AE $4,909.02 @ 14.5%
    AE $887.92 @ 11.24%
    Capital one $1,475.19 @ 13.5%
    CU visa $4,986.55 @ 11.9%
    CU visa $4,935.25 @ 8.99%
    Discover $988 @ 22.99%
    Walmart CC $670 @ 22.9%

    I would appreciate it if you could give me some insight on my situation. Would I save more if I go through a credit counseling service? My score is not good anymore so that is not my concern at this moment. Also, do we need to close all the accounts or can I pay off one card but not close it and take advantage of the cash back?

    Thanks in advance

    • Michael Bovee says

      Using the national monthly average when you are enrolled in a repayment plan with a credit counseling agency I get 753 dollars a month. That average can go up or down a little. The best way to get a to the penny quote is to call and speak with an agency directly which you can do by calling my hotline 800-939-8357. Option one will get you to a credit counselor.

      There are people who are able to keep a card open while on the plan. It is easier to do that if the card has cross purposes, like something used for your business, or for travel for your job.

      Let me know what you learn after the call.

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