Introduction
In October 2009 alone, Americans were carrying an estimated $888.1 billion in revolving debt, according to the United States Federal Reserve. A large portion of that revolving debt belongs to balances on credit cards. Many households are able to maintain current payments on their debts, but unfortunately, due to a multitude of different circumstances, some households become overwhelmed with debt, especially credit card debt. To help with this problem, many credit card debt service companies help consumers to get out of such debt.
Credit Counseling
One major part of credit card debt services is credit counseling and education. This provides those who are in debt with both the information to get out of debt as well as educational information on how to stay out of debt once they have reached their debt-free goals.
Debt Negotiation
One common service for many credit card debt services is debt negotiation. The debt services company obtains a list of your creditors and works to lower your monthly payments and, in some cases, your interest rates. Depending on the company, your debt services organization may have pre-existing relationships with collections companies and other creditors, thereby allowing them to work to lower your monthly costs. Some debt services claim to be able to reduce your debts by at least 50 percent, but there is no way to guarantee this much of a settlement on your specific situation by any one company.
Payment Options
Some credit card debt relief companies take their services one step further and allow you to only make one payment each month. This payment goes to the debt services company, who then splits it up and pays each creditor for you. Other debt services companies may instruct you in how to open a savings account that allows you to put away money each month to pay off your debts. In this case, you will be the one responsible for sending payment to each of your creditors.
Consolidation
Larger credit card debt services companies may offer to consolidate your credit card debt onto one credit card or into the form of a loan. This is one area of debt reduction that should be carefully researched as some consolidation programs may come with hidden fees or extremely high interest rates.
Fees
Credit card debt relief programs can vary widely in cost. Ideally you should choose a company that offers its services for free or very little cost. There are several nonprofit debt relief companies available, which offer such service. Other credit card debt relief companies run like a business. This means that they may charge monthly fees for their services, or in some cases may charge a percentage of your debt they are settling as a fee. These costs can vary widely depending on why and how the company is run.
Member Comments