KERRVILLE, Texas — Interest rates on credit cards are at historic highs. That interest could significantly increase your debt. Eva Bill of Kerrville was looking at a lifetime of credit card debt.
“It’s simple. Pull out the plastic card. You pull it out. You pay for everything with plastic,” she said.
Soon she found herself $43,000 in debt.
“I’ll never get out of this,” Bill said. “I’ll be working the rest of my life just to pay credit cards.”
She had several credit cards and made all her minimum payments, but she struggled to reduce her debt.
“With the interest rates, as they are right now, that’s all you’re paying,” Bill said. “You’re just paying towards the interest.”
Yet, she decided she wanted to retire debt free.
“I needed help,” Bill said.
She reached out to Money Management International, a nonprofit debt counseling service. It helped her reduce her interest rates and build a budget not based on using credit. The service can help people reduce interest rates from double digits to single digits. It can save clients about $30,000 in interest payments overall.
“You’re able to make that sort of major change to where more of your payments are going to the principal instead of interest. You can really see progress a lot faster,” said Thomas Nitzsche, a financial educator with Money Management International.
Anyone struggling with debt should consider getting help.
“If they can’t rest well,” Nitzsche said. “If they feel stressed out. If they feel like they can barely keep up with minimum payments, especially. Definitely, if you start missing payments, but really just anyone who’s feeling uncomfortable with their finances.”
It took Bill seven years to pay off her debt.
“Slowly I started seeing the credit cards just go off one by one,” she said.
It also increased her credit score 100 points. She said it was challenging but worth it.
“It can be done,” Bill said. “Don’t be embarrassed because there are people out there who can help you. I got through it and that’s where I’m at today. I am completely out of that debt and it was a large amount.”
“You’re not the worst case we’ve seen,” Nitzsche said. “Just understanding that you’re not alone and that you don’t need to feel that stigma and shame. There are safe places to go, people that aren’t going to be judgmental about it."
Getting help allowed Bill to take the next step toward her dream.
“Now I know I can look forward to retirement and not have all that debt hanging over me,” she said.
She now has only one credit card. She said credit is not bad, it just needs to be used responsibly.
Money Management International said on average, it takes clients $400 a month and four years to get out of debt. Clients also see their credit scores rise an average of 90 points. Debt counseling is always free, but there is a small monthly fee of about $24 to join the debt management program.
Nitzsche said to do research before you choose how to tackle your debt. There is a difference between debt management, debt settlement, debt consolidation, credit repair, and bankruptcy. Your individual situation will determine which step is best but educate yourself on the different options before making a decision.
Learn more about nonprofit credit counseling at the National Foundation for Credit Counseling.