Are you facing a lot of debt with no easy way forward? If so, you have probably considered credit counseling services. One question you might have is: how do credit counseling services make money? Let’s answer this question to help you create a debt repayment strategy.
So How Do Credit Counseling Services Make Money?
Credit counseling is a financial service designed to educate consumers and assist them with debt relief options. Hopefully, it leads to consumers taking charge of their finances with confidence and ultimately finding financial freedom. Another goal of credit counseling is to enable consumers to make good financial decisions in the future.
There are a number of companies that offer credit counseling, both for-profit and non-profit credit counseling companies. And since no one does anything for free, it’s important to pay for the very best credit counseling service. Here are some key facts to help you choose the right agency for you.
For-Profit Credit Counseling Services
The first type of credit counseling service are ones who are in it solely to make money. They are for-profit businesses, providing a service for a fee, or two or three. The fees can be quite high, especially compared to non-profit agencies. This is one way they earn their money. They also profit off charging you interest. It’s critical to thoroughly investigate the fee structure and fine print before choosing a for-profit company.
Non-Profit Credit Counseling Services
Conversely, a non-profit company is solely out to help and educate it’s clients. However, they still need to collect fees to provide their services. This is typically a much safer option than a for-profit company.
Let’s look at ACCC for a more specific cost example. Consumers working with ACCC receive a free budget counseling session. If the next move is to enter the debt management program, there is a one-time fee of $39 in most states. After that, there is a monthly maintenance fee of $7 per account with a minimum of $7 and a maximum of $70. The monthly maintenance fee may be waived or reduced depending on your state’s regulations or financial hardship. As a non-profit credit counseling agency, the fees help to defray the cost of providing services to the many enrolled individuals. ACCC prides itself in having the lowest effective fee structure in the industry.
Look for these key features when selecting a credit counseling agency:
- Non-profit organization
- Have been in business for at least seven years
- Licensed in your state
- Charge no minimum fees and are prepared to waive your fees if you simply cannot afford to pay them
- All the counselors should be certified
- Member of one of these organizations: the NFCC or AICCCA
Finally, remember that taking action when getting out of credit card debt is the only way to get out of debt. Make the right choice by doing research and following the criteria above to select a reputable non-profit credit counseling agency.
If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today.