How Much Can You Save with a Debt Management Plan?
A debt management plan (DMP) is an effective way to simplify your finances and accelerate your debt repayment. Most importantly, it can save you a lot of money in the process. How much? Let’s break it down.
Debt Management Plan — Average Savings
Every debt management plan is unique, with different creditors and different account balances. If you’re interested in discovering what a DMP might look like for you, begin a free debt and budget analysis online to receive a personalized estimate based on your actual debts and current budget.
To give you a sense of what most consumers can expect to save with a debt management plan, however, here’s what the average client saved in 2023, based on the aggregated data of MMI’s real client base compared against the projected cost of making minimum payments (defined as 1% of the principal, plus interest charges) without the DMP’s reduced interest rates.
This projection is a broad estimate. Your results will vary.
Debt Management Plan vs. DIY Debt Payment
| Original | Debt Management Plan | |
|---|---|---|
| Total starting debt | $21,377 | $21,377 |
| Average interest rate | 27.4% | 7.08% |
| Monthly payment | 1% of principal plus interest | $453 (includes $25 fee) |
| Time to payoff | 351 months | 49 months |
| Interest | $47,383 | $3,301 |
| DMP fees | $1,264* | |
| Total cost | $68,760 | $25,942 |
*MMI DMP fee projection based on the 2023 average for monthly fee ($25) and one-time set-up fee ($39). Fees are capped at a maximum of $59 (monthly) and $75 (set-up).
Total savings on a debt management plan: $42,818 and 25 years
The numbers paint a clear picture — MMI clients save a lot of time and money through the debt management plan. If you’re dealing with overwhelming credit card debt, you owe it to yourself to see how much you can save with a DMP.
How Does a Debt Management Plan Save You Money?
A debt management plan can clearly save you a lot of money. But how does it work? Here are the basics of how a DMP saves money:
Reduced interest rates
The main reason why you can save so much on a debt management plan is that most credit card companies offer reduced interest rates for participating on a plan.
For creditors, these reduced interest rates are a way to help ensure that you’re able to repay your debt in full. For consumers, however, these lower interest rates can equal big savings — especially if your current interest rates are on the high side.
Every participating creditor offers their own rates, but in aggregate, the average interest rate for accounts included on a debt management plan with MMI is below 8%.
Faster debt payoff times
Debt management plans are typically designed to be completed in less than five years. Part of the tradeoff for creditors reducing your interest rates is that you pay off the debt in a reasonable amount of time.
A DMP works as a debt snowball tool: as smaller debts are paid off, the money going to those accounts is redirected to your remaining accounts, increasing those payments and accelerating your debt payoff.
The average debt management plan with MMI is successfully completed in about four years. Paying off your debts quickly means fewer monthly interest charges. And when you combine that with the reduced interest rates you get for participating on a DMP, you can see how quickly those savings can add up.
And as an added perk, paying through a DMP means that you consolidate all of your debts into a single payment, simplifying your finances and making your monthly budget that much easier to manage.
Improved credit score
One more benefit of the DMP: MMI clients who have successfully completed their DMP have seen an average credit score increase of 84 points. A better credit score gets you access to better terms on credit and loan products, saving you money even after you're off the DMP and out of debt!
