Credit Card Debt Counseling - What Is It And Is It Right For Me?
Over 100,000 people search the web each month looking for credit card debt counseling services!
The use of credit (car loans, credit cards, store credit, etc.) has skyrocketed in the last 50 years. At the ripe old age of 70 I can remember hearing my father-in-law say that the only thing he ever bought on credit was a washing machine for his wife! That was an absolute necessity, and if you knew why he bought the washing machine for his wife you would agree, but we won’t go into that now.
Times have really changed since the 1940’s. The latest figures I could find on Google were for 2002. And they are frightening!
On average, 20% of Americans have “maxed out” their credit cards.
Americans’ average credit card debt is $8,400 per household.
Americans pay, on average, an 18.9% interest rate on credit cards. This translates to $83.33 in credit card interest per month.
40% of American families spend more than they earn. (Federal Reserve).
An $8,000 debt, at a rate of 18% interest, will take over 25 years to pay off and cost more than $24,000 in the long run.
And of course this enormous amount debt has spawned another by-product
CREDIT CARD DEBT SETTLEMENT AGENCIES
(better known as credit card debt counseling services)Seeking credit card debt counseling is a great strategy if you are looking to eliminate your credit card debt. If a good credit card debt counseling service does their job they will look at your unique situation, consider all the options and suggest some creative ideas that will help you map out a 3 to 5 year plan to eliminate your credit card debt!
A credit card debt counseling agency contacts your lenders, negotiates a set monthly payment, then arranges for you to make one payment (instead of a payment to each lender) directly to them each month. They then disburse the money to the various credit companies you’ve agreed to pay off. For this they charge a small fee.
Advantage Of A Credit Card Debt Counseling Service:
High interest is stopped and your creditors will be paid off over three years, instead of 25 or more if you keep going the way you are with minimum payments.
Also, once the last payment is paid the creditors will report it to the credit bureaus and show the debt as a $0 balance, which will significantly increase your credit score.
Disadvantage Of A Credit Card Debt Counseling Service:
You must cut up all your credit cards. Also, most creditors might mark the account as collection status until the final payment. Then they will report it as paid off at which time your credit score will improve.
To see how the lender is reporting your account status you can run your credit report periodically (it's always good to check your credit score every 6 to 12 months anyway).
Recommended Reading
One question remains: If I use a credit card debt counseling company will it work?
The following press release from the NFCC will answer that and we will give you the link to read more.
Press Release:
(*Silver Spring, MD/Washington, DC) The National Foundation for Credit Counseling (NFCC) ™ and Georgetown University Credit Research Center announced today during a press briefing at the National Press Club the results of a three-year study on the change in consumer financial behavior after receiving credit counseling services. The report concluded:
Strong evidence exists that credit counseling, using the method administered by Members of the NFCC, affects consumer credit usage and payment behavior in a positive way. Borrowers who received this form of budget/financial counseling reduced their debt and improved their credit profile over three subsequent years, compared to similar borrowers who did not receive counseling.
To read more go to: http://www.nfcc.org/newsroom/shownews.cfm?newsid=257
So the answer is yes, credit card debt counseling services are a great way to lower your interest rate, pay off your debt in a reasonable amount of time, and bring you some much needed debt relief!
Take the survey below and let us help you determine which solution is right for you.
|
Recommended Partners bipolar-lives.com |
