Based on studies, it is discovered that many transactions in the US are actually based on loans and credit. This is often considered as a more convenient way of shopping. However, excessive amount of debt can be quite detrimental to our overall financial health. In some cases, interest rates can be as high as 29.99 percent. With so much interest rates, it is actually possible that people will end up having more and more debt, despite their best efforts to repay it. One of the most common methods we choose is debt counselling. This type of service is intended to allow people to better manage their debts.
In a proper debt counselling program, people are urged to be aware of their overall income and expenses. Many people are actually not aware that they have lived beyond their means. It means that they have spent more than they are earning for specific amount of time. We should know that money needs to come from somewhere and earning money is not the easiest thing in the world, even for billionaires. Without debt counselling, it is possible for people to choose risky debt elimination methods, such as getting home equity loans to consolidate their debt, because these loans have lower interest rates.
Many people need to be properly counselled for their current debt situation. As an example, debt could cause problems with our credit score. Good credit score can properly affect us in many ways. In fact, poor credit card could potentially keep us from getting better job. Professional and honest debt counsellors should be able to teach us properly on the whole credit card process. They could show us how paying only minimum payments could actually cause us to waste money. Many people actually don’t completely understand about the actual inner working of credit card process.
Some debt counsellors actively track our financial situation. When the credit card payment is due in a few days, the counsellor could notify and warn us. This is important, because the late fees can be quite significant, causing the overall balance to balloon, possibly negating our previous payments. Debt counsellors should also be able to determine which credit card that we should pay off first. As an example, counsellor could ask us to focus on cards with the highest interest rate first. The counsellor may cut up the card and look for ways to eradicate the high-interest debt. During the process, the counsellor will also teach us how to properly control our expenses.
Professional counsellors should be able to keep an inventory related to the overall details of our financial situations. We will be taught in how to be properly aware of our credit limit. It could be really difficult for us to go over our credit limit if we fail to catch up with all the required fees. Debt counsellors should be able to teach us in how to properly use cash, instead of using our credit cards.