How to pay off credit cards enrolled in a debt management program?
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I have been in a debt management program with a local credit counseling service for about 8 months. My parents have offered to co-sign a loan so I can pay off the cards. The loan with the bank is a lower interest rate than the cards and will pay them off faster with a lower payment each month. Should I pay the cards directly or go through the credit counseling service? Which is better for my credit score?
How to pay off credit cards enrolled in a debt management program?Pay off the cards but keep the accounts open. You earn points for having an account that is kept current (no payments more than 30 days late). This includes an account with a zero balance. A credit report will reference the account's high balance and current balance. If any of your cards have a yearly fee, I'd go ahead and close those ones.
How to pay off credit cards enrolled in a debt management program?The Credit Counseling company will probably get you a better price in the long run because they will negotiate a lower rate than you can. But, you are being charged a very large amount of compounded interest on every dollar that you owe them for every Month that the amount is owed. Let Mom and Dad help IF the interest rate and terms are better than you are currently paying the credit card companies. And, if you can afford to pay all of your bills iccluding that payment. Remember that the credit counselor is making money on you, they will not always counsel you to your advantage.
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