Financial Therapist Vs. Financial Advisor. Vs. Credit Counselor: Which Is Best For You?

U.S. credit card balances reached a whopping $1.17 trillion in the last quarter of 2024, according to a Federal Reserve Bank of New York report. Higher inflation and a rising unemployment rate (4.2 percent as of November 2024) may be pushing consumers to use credit cards to pay for basic living expenses.

Half of the country’s credit cardholders carry a balance from month to month, according to Bankrate’s Credit Card Debt Survey, compared to 44 percent in January 2024.

All that rising debt can also put a strain on cardholders’ mental health. Around half (47 percent) of U.S. adults say money has a negative impact on their mental health, at least occasionally, causing anxiety, stress, worrisome thoughts, loss of sleep, depression or other effects, according to Bankrate’s Money and Mental Health Survey.

However, there is help — if you want it. Your options include financial therapists, financial advisors and credit counselors. Below I’ll cover the differences between the three and share insights from those who chose one, along with what drove their decisions.

When to choose a financial therapist

“A common misconception is that financial therapy is only for people in debt,” says Kate Dorman, a certified financial therapist. “Financial shame, anxiety, guilt, envy and entitlement do not discriminate based on race, ethnicity, age, gender, sexuality or ability. People of all socioeconomic statuses can benefit from financial therapy.”

The role of a financial therapist is not to tell people how to manage their money, says Dorman. “[It’s] to help them to better understand their relationship with money and empower them to confidently manage it. Someone may choose a financial therapist because they want to break long-standing financial habits and develop healthy [ones]; reduce financial anxiety and stress; decrease feelings of financial shame; increase confidence in financial decision-making; create a financial path forward; change intergenerational money scripts; identify and establish financial boundaries; and effectively communicate about money with a partner, friend, or family member.”

The cost of financial therapy depends on factors like therapist experience and the cost of living in a geographic location. “Financial therapy is a flat hourly fee and ranges from $100 to $800 per appointment. Some financial therapists accept insurance or offer sliding scale rates, while others do not,” Dorman says. “Whether a financial therapist accepts insurance depends on license type, state of license and personal preference.”

Financial therapist experience

Financial therapy varies in duration based on individual needs, goals and progress. “Personally, I have worked with some clients for as little as a few months and with other clients for a couple of years,” says Dorman.

As the owner of Calgary, Canada-based Gemstone Lights, Tate Leavitt says he found himself overwhelmed by guilt and anxiety about his finances. “I knew I needed more than just a financial advisor to tackle these emotional barriers.”

A financial therapist helped Leavitt understand his relationship with money and how his fear of debt kept him from moving forward. “If you’re in debt, [a therapist] might be beneficial in breaking the pattern of bad financial behaviors,” he says. “While free tools such as podcasts and audiobooks might provide helpful advice, a financial therapist provides personalized support, responsibility and guidance based on your specific situation.

“My therapist helped me with identifying how my debt-related anxiety and guilt were interfering with me from taking action, as well as highlighting my stress-shopping sprees and how I could manage [them],” says Leavitt. “With their assistance, I changed the way I thought and began taking real actions to more comfortably handle both my professional and private money.”

Leavitt and his therapist worked together to develop plans for paying off high-interest debts. “This offered me a sense of control and clarity, lowering my stress and allowing me to go forward with a clear plan.”

When to choose a financial advisor

A financial advisor is a smart choice if you need help managing your money, says R.J. Weiss, a certified financial planner (CFP) and CEO of The Ways to Wealth, an independent personal finance website. “Most CFPs specialize in helping individuals with existing assets, whether they’re focused on growing those assets, maintaining them or figuring out how to withdraw them efficiently in retirement.”

CFPs often charge based on assets under management or through fee-based structures, says Weiss. “If it’s fee-based, very few CFPs offer à la carte services for quick, one-off sessions. Instead, they typically work on long-term relationships. Depending on your needs, you might pay $200 to $300 per hour and need at least 10 to 20 hours of help and planning annually.”

The quality of a CFP is your priority, Weiss says. “You want a transparent and collaborative relationship where both of you are working together to achieve your goals.”

Financial advisor experience

Kevin Shahnazari, founder and CEO of FinlyWealth, a Canadian credit card recommendation platform, hired a financial advisor in 2018 after racking up debt starting in 2015. “At that time, I had $45,000 in credit card debt across multiple cards, with primarily personal and business-related expenses with interest rates ranging from 18 percent to 24 percent. I needed someone to analyze my entire [financial] picture and not just my debt.”

All this was happening during a period of significant personal and professional transition, Shahnazari says. “I was launching initial business ventures and managing personal expenses simultaneously.”

The advisor, recommended by a local business networking group, helped with insights into the interconnection between spending patterns and business investment decisions, says Shahnazari. “I specifically sought an advisor with experience in both personal finance and small business financial planning, which was crucial for my comprehensive financial strategy.”

Shahnazari’s advisor helped him with:

• Creating a structured debt repayment plan that prioritized high-interest cards.
• Providing strategies for balance transfer opportunities.
• Optimizing credit card rewards to accelerate debt payoff.
• Developing a comprehensive financial strategy that balanced debt reduction with business growth.

“Within 18 months, I paid all my debts with a structured plan that always prioritized high-interest cards while maintaining business growth,” says Shahnazari.

When looking for a financial advisor, Shahnazari says:

• Find someone not just in debt management, but in holistic financial planning.
• Choose an advisor who can provide both tactical and strategic financial guidance.
• Ensure they understand your specific personal and professional context.
• Be transparent about all aspects of your financial situation.
• View the relationship as a collaborative partnership for financial growth.

When to choose a credit counselor

Those best suited for a credit counselor are struggling with high debt, says Monique White, an accredited financial counselor and head of community at Austin, Texas-based Self Financial, a credit-building platform. “Missed payments, high credit utilization and a low credit score are some signs that it may be time to connect with a counselor. It’s important to choose a reputable agency to ensure you’re receiving qualified advice.”

Certified credit counselors are trained to help individuals manage debt more efficiently by creating a budget and walking through debt options, says White. “Lifestyle adjustments, debt management plans or bankruptcy are some options a credit counselor will walk through with their clients.”

How long clients stay with a credit counselor are based on the amount of debt, income and the time commitment, says White. “If a client enrolls in a debt management program, they may work with their counselor for between three and five years to pay off their debt.”

Credit counselor experience

Tiana Moore, a registered nursing student from New Britain, Conn., recently completed repayment of $25,000 in credit card debt using the services of nonprofit credit counselor Money Management International (MMI).

Moore admitted that over three years, she racked up debt by swiping her credit cards for everything. “It accumulated so quickly. But what really hit hard was the [cards’] APRs were wicked high, at between 27 percent and 29 percent,” she said. “I was connected to MMI from my bank, Bank of America, after a layoff in 2019 and work interruption in early 2020 due to the pandemic. They said they partnered with MMI to help customers consolidate debt.”

The timing was ideal, says Moore. “It came to a point where I was trying to maintain the minimum monthly balance of $25 because that’s all I could afford at the time. And then having kids in a house to pay for, I was drowning in debt,” she says. “I had to figure out [what] to do, or I was going to have to file for bankruptcy.”

Moore didn’t want to take that drastic step to get rid of her debt. “I wouldn’t be able to get any type of loans for the next seven years if I filed for bankruptcy,” she says. “When I heard about MMI and knowing that I could potentially avoid bankruptcy, that was the way to go for me.”

As for why she went with MMI, Moore says she didn’t know other options to help her tackle her debt were available. “The thing that enticed me the most to work with MMI was seeing just how quickly I’d be able to pay off my debt. They gave me an estimate of about four and a half years to pay it off,” she said. “Seeing that projection, versus what it [would] cost me out of pocket in the long run if I continued paying the minimums, was an extreme difference in savings.”

Now that she’s debt-free, Moore says it was all worth it, and the biggest lesson learned with MMI was not to get back into debt again. “It’s not for the faint of heart. I was making a monthly payment of about $500 to have MMI manage my debt — and that was hard. I’m a mom and I have a household to maintain. So $500 a month seemed like a lot.”

The bottom line

Money is deeply personal and emotional, says Dorman. “If you are going to be open and vulnerable with a therapist, you need to be able to trust and connect with them. Make sure to communicate your needs to a therapist during the initial consultation call and also ask your therapist for information about their approach to their work with clients to ensure that you are a good fit for one another. Be open to having your money beliefs challenged, [because] through examining your money beliefs, you can truly grow.”

“Once you’re out of debt and need strategies to build, maintain or protect your wealth, that’s where a CFP is the right choice,” says Weiss. “On the other hand, financial therapists are better suited for people who have struggled emotionally with financial situations and need help taking action to improve their financial lives. Credit counselors are ideal for those who are overwhelmed by their debt situation and need guidance to create a clear plan to get out of debt.”

Shahnazari’s experience with a financial planner inspired him to launch FinlyWealth. “My advisor taught me credit card strategies I share now with our platform users, [such as] using balance transfer opportunities and maximizing rewards optimization to speed up debt payoff,” he says. “Involving a financial advisor with my project gave me tools that go way beyond debt management. I learned to see credit as a business tool rather than a burden.”

Seeking help from a credit counselor is a step toward improving your financial health, says White. “But these types of services can be costly. Depending on where you bank, sometimes these fees will be covered if you are a member of a credit union. So check to see if your financial institution offers partnerships with credit counseling agencies.”

In January 2024, Moore managed to pay off her $25,000 debt in four years instead of four and a half. “When I started with MMI, my credit score was in the mid-600s,” she says. “Now I’m at 781.

“Don’t even think about it,” Moore continues. “Just do it because you’re only going to hinder yourself and continue accumulating debt if you don’t do something about it. You’ve got to take that leap of faith.”