When someone winds up buried in credit card debt they may
panic or freeze up. One solution that seems very tempting is to contact a
credit card debt consolidation service. The idea with a service like this is
that they will pay off all your credit cards and take on the debt you owed
them. Then they give you one payment at a lower interest rate than you would
have had with he cards. It's valuable to learn how these services work. They
are in business to make money, and will be charging you interest and fees.
It's not to say they can't help you. Often it is a great way to get on track
to get out of debt. Since you are probably buried in debt, and scared at
this point, it is important to maintain your composure. Be careful in your
decision making process. Shop around and find a good company with fair fees
and competitive interest rates.
Now, sometimes, instead of paying off your credit card debt, the company you
hire might charge you a fee to negotiate with your lenders to get you a
lower interest rate. They will do this with strategies that they know and
understand. Larger credit card debt consolidation companies might have
established relationships with credit card lenders which will assist them in
securing a reduction in the interest rates you are presently paying. There
is a secret truth though. If you aren't afraid of a little confrontation,
you might consider attempting direct negotiation with a credit card company.
You can sometimes qualify for a hardship plan which will temporarily reduce
your interest rate for 6 to 12 months. Or if you have some money available
to you, and have fallen behind on payments, you may be able to negotiate a
payoff. In other words. If you owe your credit card company $2000, you can
offer to pay them $600 today to pay off the debt. It's hard to believe, but
especially if you haven't paid them for months or years, they may accept
such an offer. It is not uncommon for them to accept a payoff of half of
what you owe them. This will reflect on your credit report that you have
indeed paid off the debt. The exact amount of the settlement won't be
displayed on your report, but the fact that it was a negotiated settlement
will be visible.
It is possible that a debt consolidation service won't actually pay off your
credit cards. They may simply work out a better payment plan on your behalf,
receive one payment from you monthly, and send out multiple payments on your
behalf to your creditors. Remember though, that they will be taking a fee
for this service. You may decide that the fee was worth it, as the fee might
covered by the reduced interest rates. So the system may be able to reduce
your payments and increase the amount being paid to the principle. In other
words, it may be a way to pay off your credit cards faster and with a lower
payment. These processes are easier than they sound. It doesn't cost you
anything to check into it. It costs you nothing to simply ask for what you
want. You may be pleasantly surprised to receive it.
Finding a good company is pretty easy. There are many respectable online
debt consolidation services. Sometimes there will be an office in you home
town which can provide the convenience of being able to make your payments
in person. Some people like the personal touch of dealing face to face with
a real person. Online companies have the advantage of reduced overhead, so
it is possible to get a better deal on line. Before making any phone calls,
be sure to gather all your bills, so you will have the information handy.
They will want to know about all your bills. Not just the ones you are
interested in consolidating. Hopefully, they will be able to help you get
penalties removed. It is possible for them to completely remove your
interest charges, where you would pay 0% interest, at least for a while. You
will probably be expected to have automatic payments set up from your bank
account, and should probably get your paycheck direct deposited. This
automatic plan will make it so you don't have to write any checks or worry
about it at all anymore.