Can I Use a Credit Card While on a DMP?

If you’re ready to become debt-free, then a debt management plan (DMP), which provides one monthly payment, lower interest rates and ongoing support from certified financial counselors, might be the perfect solution. But before you take the leap, there are a few things you’ll need to understand, like the fact that you probably won’t be able to use a credit card during the duration of the program.

You’re required to close your accounts

Any credit card that is included in your DMP is required to be closed. Here’s how it works — the creditor, which is typically a bank or other financial institution, works with MMI to create a DMP, which usually includes reduced interest rates on your credit card accounts. Lower interest rates are a win-win for you and the creditor because the lower rates make it easier for you to pay your balance, and as a result, ensures that the creditor gets paid. But one of the creditors’ conditions for offering a lower interest rate is that you close the credit card. This ensures that you use the lower rate is used for its intended purpose: debt freedom.

Keep in mind - the agency administering your debt management plan will not (and cannot) close your credit cards. If you don't close the accounts on your own, your creditor will once the account has been accepted onto the DMP.

You'll be allowed to keep one account open

While we typically advise DMP clients to close all credit card accounts before starting their DMP, you are allowed to leave one account open in the event of emergencies.

Obviously, you'll want to use this card sparingly to avoid creating new debt during your program, but if you're worried about not having any available credit: never fear. You can successfully start and maintain a DMP while keeping one card open.