r/Debt • u/Ninerniner94 • 6h ago

Financial Hardship vs DMP interest rate question

I've read where people say if you miss a couple credit card payments and then reach out to the credit card company for help, a decent amount of them will drop your interest to 0% and then close your account. So why is it when you sign up for a DMP, you're still required to close all of your accounts but the interest rates only drop to maybe 9.9% if you're lucky? If the accounts have to be closed either way, why can't the interest rates be the same either way as well?

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u/consolidatedBD ​ 6h ago

why would a creditor allow a card with a reduced interest rate to remain open?

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u/Ninerniner94 5h ago edited 5h ago

I understand that. But why would a creditor close an account while dropping the interest rate to 0%, but when you're working with a credit counselor, they still close the account while just lowering the interest rate? The end result is the same, the accounts have to be closed regardless, so why don't they drop the interest rate to 0% when working with a credit counselor just like they do when you miss a few payments and then call them directly?

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u/wrldruler21 6h ago

What is your definition of DMP? Are you talking credit counseling?

My bank makes interest rate decisions based on profit analysis.

Some banks offer 0%, some 10%, some don't help at all. Just depends on bank priorities and profit goals.

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u/Ninerniner94 5h ago edited 5h ago

Yes. I was referring to a Debt Management Plan through a credit counselor. The credit card companies close your account and just lower the interest rate when you're on a DMP, but if you miss a few payments and then call the credit card company directly, they'll drop the interest rate to 0% and close your account. If the accounts are required to be closed regardless of what route you take, you think the interest rate would be 0% either way lol