If you are one of the millions of credit card holders who is saddled with debt, you know how overwhelming it can be. It may seem impossible to get ahead of it.
But there is help out there, and it can be done. A Massachusetts woman knows that first hand.
When Cara Curtis of Somerville had to relocate to Virginia for her job in 2012, she rented an apartment that was a little more than she could afford.
"Then I continued to try to keep up with the Joneses and spent a ton of money,"said Curtis. "And I started putting my rent on a credit card and then a different credit card, and then to the point that I had 12 credit cards and they were all maxed out … I just kept thinking like, 'Oh, I can pay it off, I can pay it off. I'll just pay more money next month,' and it never happened."
Get New England news, weather forecasts and entertainment stories to your inbox. Sign up for NECN newsletters.
She found Money Management International on her bank's website. MMI, formerly known as Consumer Credit Counseling Services, is a nonprofit that offers debt management plans and financial education. She asked for help.
"They were super nice about it. They were not judgmental," she said. "I didn't want an easy way out, and I wanted to pay it back … MMI put together a program. They negotiated successfully with 11 of my 12 credit cards and they lowered my interest rates down to about 6%."
She says the assistance made a major difference.
"It was a huge relief on the interest," she said. "Over five years, I paid one bill to MMI for the same amount of money that I was paying to 12 different credit cards on all different due dates."
Over five years, Curtis repaid $80,000 through the debt management plan with MMI, and increased her credit score 118 points along the way.
She now relies on a debit card, and she has only one credit card with cash back benefits, shich she pays off in full each month.
"It's just the greatest feeling," she said. "I had one card that had like $230 on it, so that got paid off pretty quickly."
It was freeing to have that debt behind her.
"You start seeing those zero-balances come in -- but then really in year four, you see a lot of zero balances come in," Curtis said. "And that was just really exciting. It's like putting your report card on the fridge, I wanted to put that MMI statement on my fridge, like, 'I paid this off!'"
MMI has seen a significant increase this year in both the number of people seeking financial counseling and in the total unsecured debt that they carry.
"The average client between last year and this year has increased substantially from about $20,000 to almost $30,000 in total unsecured debt," said Thomas Nitzsche, a senior director at MMI. "They typically have about six to seven creditors, and on average, we reduce the interest rates about 19 percentage points down to around 7%. So obviously, that means that much more of your payment is going towards principal rather than interest, which enables people to get out of debt faster."
When you contact MMI, it will provide a free debt and budget counseling session.
"For those who do enter into debt management like Cara did, there are some nominal client fees that go along with that," said Nitzsche. "The average client fee for our clients in the U.S. is about $24 a month, but it's obviously offset by interest savings."
Curtis has advice for others who are struggling with debt.
"I think just don't be embarrassed, that it's definitely more common than people talk about," she said. "I'm a real person who had real debt and I really paid it off!"
When you start a debt management plan, the credit cards are closed once they are paid off, which does negatively impact your credit score. But over the four years of paying down debt, on average, MMI's clients increase their credit score about 90 points. So that slight decrease can lead to long-term improvement.
