Best and Quickest Ways to Destroy Credit Card Debt
Debt Management Program
A Debt Management Program (DMP) is a great way to pay off credit card debt. It reduces financial stress by combining the benefits of lower interest rates and lower monthly payments.
A DMP is similar to debt consolidation in that it combines multiple debts from multiple creditors into one payment. Unlike a Debt Consolidation Loan, it does not require new financing nor credit approval. DMPs are not loans.
Credit counseling agencies that offer DMP’s like DebtWave do the work for you. We contact your various creditors to set up a single repayment plan that works with your budget. Our DMP typically has you completely debt-free within three to five years. In some cases, plans may extend beyond five years.
At DebtWave, we work with creditors on your behalf to reduce your monthly payment and your interest rates. By significantly reducing interest rates, much more of your money goes toward paying off the debt instead of paying absurd finance charges.
Debt Management Stats
In 2024, our average customer's interest rate prior to the DMP was 23.05%. This is slightly above the average. After enrolling onto our DMP, their average interest rate dropped to 6.83%.
Client enjoyed a drastic drop in their monthly payment in 2024. Our average customer's monthly payment prior to the DMP was $915. After enrolling onto our Debt Management Program, their average monthly payment lowered to $694. That's an average decrease of $221 per client!. Not everyone's payment decreased. The monthly payment is determined by your balances, the credit card company's guidelines and your budget.
Debt Settlement vs. DMP
Though similar in name, a debt management program is not the same thing as a debt settlement program. A Debt Settlement program requires consumers to fall months or even years behind on payments, By doing this, the collection agencies will settle for a percentage of the debt you owe.
With debt settlement, consumers pay a percentage of what is owed to their creditors, but this often results in a negative impact to your credit score. Especially if you were in good standing prior to joining their program. Consumers on a DMP pay back the balance in full to their creditors. So the credit score impact is usually neutral if not positive over time.
Debt Management Credit Effect
Enrolling onto a DMP can improve the two biggest factors used to calculate credit scores: credit history and credit utilization. There is potential to weaken your credit score if you don’t continue to make payments during the enrollment process. But as long as you continue to make minimum payments until the program starts, enrolling in a DMP should not negative impact your credit. Obviously, making on time payments while on the program is required to keep your credit in good standing.
DMP’s are typically offered by consumer credit counseling agencies that are 501(c)3 nonprofit organizations. Because of this, the cost of the DMP is relatively less than other debt solutions. When enrolling in DebtWave’s DMP, clients can expect to pay an initial setup fee and monthly service fee. Fees vary by state. So please contact one of our financial counselors to find out how much it costs for you personally to enroll in our DMP.