Consumers Beware of
Credit Counseling Debt Consolidation Agency
November 6th, 2005
Debt Agency costs
With the onset of a double
minimum payment on credit cards, many people may be feeling the
squeeze to make the payments. Instead of not paying your credit
card bills, take the time to consolidate your debt to a more
manageable lump sum with lower interest rates. Some people may
consider the credit counseling debt consolidation services for the
answer. This might not be the best solution.
The credit counseling services
claim to be a “non-profit” company that consolidates your debt into
one lump sum. You then pay them a monthly payment and the intern
sends the payments to all the creditors. They do work on your
behalf to get a lower interest rate for you and it can offer a bit
of relief to have them make all the payments. The reality is that
these agencies get a cut of the money which can add anywhere to $250
to $5,000 depending on the agency just for fee processing. They
also get a percentage of the money that you pay back to the credit
card companies. So they are getting their cut too.
The credit agencies do not work
with people that have secured debts like home and car loans. There
is also a risk that some of these agency are running a scam and are
not paying off your debt at all. The reality is that the
“non-profit” in these agencies does not come free of charge. They
have to afford to pay for the advertisement on TV.
With a little homework and a
little organization, it is possible for a person to accomplish the
same efforts on their own. You will know that the creditors are
actually being paid and not have another surprise if they have not;
you are not paying out the $250 - $5,000 in fees to an agency which
could be used to pay off your debt. It might be time to schedule an
appointment with yourself at least once a week to look at the bills
and have a plan of action regarding this matter. If it is more
critical take the time to take care of the plan immediately take the
whole weekend to work out a plan and follow up every week with
yourself to see what else needs to be done or improved.
The agencies also make you
cancel all of your credit cards in the process. If you can put the
cards away and not use them this may be better for your situation.
If you need to quit cold turkey because the cards have become a big
part of your lifestyle, canceling the cards may be a better
solution. A statistic to mull over on the credit repair agencies,
around 50% of the people that apply and go through the process drop
out only after 3 months with the program. The sad part is that
these people have a mark on their credit report now regarding the
counseling agency and it will hurt their credit score even more.
It would be better to try to get
your balances put together in an unsecured loan at the lowest
interest rate that you can. Most credit cards charge 19.99%
interest. However if you shop around for an unsecured personal loan
you might get a lower rate with the same one payment plan. Eloan
offers these kinds of loans up to $25,000. The interest rates will
vary depending on your credit score when you apply. By consolidating
your debt into one loan you will know that your payments are being
made and you will not wonder if the agency is doing their part.
If you own a home it might be
easier for you to get home loan to cover all the credit card debts.
This will not only lower the interest rates, it will also give a
primary residence tax deduction for the interest paid on the loan.
A financial counselor may be
worthwhile expense. Your local community college might have a class
on budgeting. You can purchase many books on how to consolidate
debt. By researching the problem you will become educated on how to
manage your expenses better. Even when you think you can’t save
money if you have a limited income, there usually is some area that
you can save a little hear and there.
Best Syndication Staff Writer
Keywords and misspellings: det
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