Market Overview

Credit Card Debt Counseling

Credit Card Debt Counseling

If you have high unsecured debts (credit cards, line of credit, personal loans), what are the options for getting out of debt in a relatively short period of time?

Typically for a person with $30k of unsecured debt , paying only the minimum amount each month will take around 30 years to pay off that debt. Banks are not giving out consolidation loans due to tighter lending restrictions and bankruptcy should only be used as the last resort.

Credit Card Debt Consolidation Services take up to 54 months to complete and leave the client debt free. If you are thinking 'where is the catch?' let's take a look in detail how they work compared to going at things alone.

These examples use a debt load of $30k with an average APR of 19.9%:

Paying off the debt by yourself

* Minimum payments are $900.

* Monthly interest on the accounts: $497.50. Therefore, only $402.50 goes to the principle debt.

* Over 54 months the debtor pays the creditors: $48,600 and is still far from being debt free. In fact they are still in a similar place.

Paying off the debt with Credit Counselling

* Your minimum payments are reduced to: $643.06

* Monthly interest is stopped through interest relief negotiated for you through the agency.

* You save: $13,875 through the duration of the program.

Why Debt Consolidation Programs Work?

The key to becoming debt free and saving so much money is the interest relief. Getting that interest stopped means your payments go the principle debt bringing your debt load down fast. Your credit counsellors will negotiate all this on your behalf as soon as you have shown commitment to a program and sign the according release of information.

How does the agency get paid?

Already included in the monthly payment is a small fee. Depending on which agency you choose there may be a set up cost, but this is far out weighed by the amount you save in the long run.


Posted-In: Personal Finance



View Comments and Join the Discussion!

Consolidate Credit Card Debt Through Bad Credit Debt Consolidation Loans

Zignals Stock Charts for the Week