If you’re using credit cards to pay for household necessities like groceries and gas, you’re not alone. A recent survey found that 48% of households with revolving credit use their cards for necessities. But with interest rates still high (20.10% as of February), and inflation still putting a dent in our bank accounts, getting your credit debt under control is critical.
One way to get on track is through a debt management plan (DMP). This allows you to work with a credit counselor, who will work with your credit card companies to reduce your interest rate and consolidate your loans into one monthly payment.
Here’s how to tell if you should try a debt management plan in 2025:
Your Credit Card Balance Isn’t Budging
Despite making regular payments, your balance is staying the same or even going up. This indicates that you’re not paying enough to tackle the interest rate—let alone the balance.
Your Loans Will Not Be Paid Off in Five Years
While it’s important to continue making the minimum payment to keep your credit score from taking a hit, if that’s all you can pay, you may have a long road ahead of you. A debt management plan is designed to help you pay off your debt in three to five years, giving you a healthy timeline for repayment. The longer it takes you to pay off your debt, the more you pay in interest.
The Minimum Payment Is Too Much
Not paying the minimum payment each month on your credit cards will make you delinquent and hurt your credit score. Additionally, it will lead to more debt as interest rates rack up what you owe.
Collection Agencies Are Calling
When you’re late on a payment, you typically get a 30-day grace period. But if creditors are calling you, your credit score has already taken a hit.
Bottom Line: A Debt Management Plan Can Help
When you enroll in a debt management plan, a certified counselor will work with you on budgeting and financial goal-setting. This will help you repay your loans and be more informed when you have to make financial decisions in the future.
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