Nonprofit Credit Card Counseling

Credit card counseling companies advertise helpful services for people who are having trouble managing their debt, and many counseling firms emphasize their nonprofit status. The Better Business Bureau warns that some lie about being not-for-profit, and even companies that really do have nonprofit status are not necessarily legitimate. The status is just one factor in judging a credit counseling firm's legitimacy.

Status

A credit card counseling company's nonprofit status claim is easily verifiable. The BBB explains that your state charity official can confirm the counseling firm's status for you. The National Association of State Charity Officials provides contact information for the proper officials. Two professional organizations, known as the National Foundation for Credit Counseling and the Association of Independent Consumer Credit Counseling Agencies, offer referrals to legitimate nonprofit credit card counseling services.

Funding

Nonprofit credit card counseling companies that are on the level should readily disclose their funding sources if you ask them. Nonprofit status does not guarantee that a firm charges reasonable fees. Good firms get the bulk of their funding from creditors, according to the BBB. You may be asked to pay for certain services, but many firms waive their fees if you are too destitute to afford their help. Only work with a counseling company that gives a clear statement of fees in writing.

Services

Good nonprofit credit card counseling companies offer a full spectrum of services to assist you in handling credit card debt. The Federal Trade Commission explains that they should have free educational materials, as well as classes and personal counseling. Counselors should be independently certified and able to help you with everything from creating a budget for your credit card bills to negotiating with your card issuers and setting up a manageable payment plan if you are deeply in debt. Banks sometimes agree to lower your minimum payments, erase late fees from your accounts, and even reset the clock on delinquencies if you commit to a structured payment plan through a nonprofit counseling firm.

Considerations

Credit counseling is not the right solution for every person buried in credit card debt. MSN Money columnist Liz Pulliam Weston explains that National Foundation for Credit Counseling statistics show that two-thirds of the people who sought counseling in 2008 were able to either manage their credit card debt on their own after some education or entered structured payment plans, but one-third were too deeply in debt to be helped by counseling services. Bankruptcy is sometimes necessary when you have too much credit card debt and too little income.