Definition of Credit Counseling

Credit counseling deals with helping consumers manage and control their debt load. One of the functions of credit counseling is to help educate and counsel consumers about the pitfalls of accumulating too much debt. There are several programs that counselors can use to help those who have amassed too much credit. These programs can help consumers pay off their debt in a shorter time period by reducing their costs.

Definition

Credit counseling educates and counsels consumers about the downfall of accumulating too much debt. If you cannot pay your debts, you start to accrue late charges, finance charges, over the limit fees and higher interest rates.

Debt Management

Sometimes consumers need to enter a debt management program as a part of their credit counseling. Consumers then allow credit counselors to negotiate with their creditors for lower balance, no fees and a lower rate of interest.

Purpose

During credit counseling consumers should be informed about the importance of using credit cards only for emergencies.

Balance

Credit counseling should consist of instructing consumers how to pay off their entire balance when the statement arrives.

Cash

Credit counseling should advise consumers about the effectiveness of paying for merchandise with cash as opposed to credit.