If you have overwhelming credit card debt and have looked into different types of debt repayments plans or debt relief programs, debt consolidation might seem like a strong choice to help yourself get back on a financial track. This is because many debt consolidation companies have offers that sound amazing, but in reality are too good to be true.
When you consolidate your debts, you are choosing another loan with a lower interest rate to pay down all of your other loans and debts. As a result, that loan provides you with credit card debt help, and since it pays down all of your other loans, you now have only one payment to make every month.
One must be cautious with this kind of debt help option!
Many credit card debt consolidation loans have interest rates that are actually higher than what you’re already paying and often have tricky clauses for bumping your interest rate even higher if your even one day late or miss a payment. These fraudulent and scamming companies are also in the practice of offering low monthly payments, but this often stretches your payments for even longer, so you end up paying even more interest to your lender!
You must always make sure a company is legitimate and has a proven track record. Always view their Better Business Bureau rating and read comments by past clients.
There are also debt management programs and debt settlement programs to help with credit card debt and other unsecured debts. Debt management programs are usually very similar to debt consolidation & credit and debt counseling programs and will consolidate your payments and lower the interest rates.
Debt settlement programs work a little bit differently. With a debt settlement plan you can actually negotiate credit card debt down, get lowered monthly payments, and be out of debt much sooner!
When you opt for this type of credit card debt help, debt arbitrators negotiate on your behalf to achieve a smaller total debt amount for you. Typically, your creditors will agree to an amount that is literally a fraction of what your balance is currently.
After all, it makes more sense for lenders to guaranteed payments from you now instead of the little bits and pieces of it over the next seven to ten years where there is a risk of you ceasing making payments resulting in your creditors receiving nothing.
So, with debt settlement, a lower overall amount is agreed upon and you pay only that amount (at 0% interest) not the full total of your debt and those debts are satisfied.
Debt Free Counselor provides free consultations for consumers experiencing medical or financial hardship and are overwhelmed by credit cards, personal loans, medical bills, collection accounts, or other unsecured debts. You can fill out our application page and be contacted by one of our debt counselors or you can call now to be connected immediately