Auto Debt

It involves applying for a new personal loan with a lower interest rate than your current debts (especially credit cards) and using it to pay off those high-interest balances. This simplifies multiple payments into one and reduces the total interest paid, helping you pay off debt faster.

A DMP usually lasts between 3 to 5 years, depending on the total amount of debt and your agreed-upon monthly payment. The counselor will provide a clear estimated timeline before you enroll.

Most balance transfer cards charge a fee, typically 3-5% of the transferred amount. You must calculate if the interest you'll save during the introductory period outweighs this upfront cost. A $5,000 transfer with a 3% fee costs $150.

Credit card companies generally report your balance and credit limit to the bureaus once per month, usually on your statement closing date. This is the balance that gets calculated into your score.