There is light at the end of the tunnel! With the economy only beginning to recover, and still a sky high rate of foreclosures and repossessions, millions of American consumers are seeking out the option of credit counseling. Since the National Foundation of Credit Counselors was founded in 1951, hundreds of agencies throughout the nation have been helping people get out of suffocating debt through a number of proven methods.
Of late, the method most commonly employed has been credit card consolidation. This involves the counseling agency bundling all debts into one monthly payment, and then negotiating with the lenders to reduce payments and interest rates, and sometimes even to eliminate late fees. Although the benefits of this approach will vary from debtor to debtor – and from agency to agency for that matter – it can be a lifesaver for consumers facing grave debts.
There are two types of debt consolidation—one is more of a bill paying service combined with negotiation, in which a credit counseling agency collects a single payment every month from you, and uses it to pay off all of your credit card bills while negotiating for lower payments and interest at the same time. The other option is an outright loan, usually against collateral (such as a home equity line of credit). The latter option may be a good idea, but not always. A HELOC may result in a lower monthly payment, but it transforms your unsecured debt into secured debt, and you are putting your home on the line. You may also need to pay extra “points” and loan closing fees that can add up.
Credit Card Consolidation Can Be Quicker, More Convenient and More Effective Online
The speed and convenience of the internet has brought many natural innovations in many fields of business, with credit counseling being a major beneficiary. In seeking out your credit card consolidation loan online, the consumer is saving time, and everybody remembers the old adage, “time is money”.
In handling credit card consolidation online, there is no need to gather up all the bills, terms, interest rates, and contracts, and then take them down to a stuffy office to be pored over by an intimidating, overworked loan officer. If the debtor is forthcoming, then everything can be organized even more efficiently online than in person, and the focus is more on the data than on the debtor’s appearance, speech, nervous gestures, etc. This is often beneficial to both the debtor and the counselor.
Important Tips for Dealing with Online Credit Card Consolidation Companies
- There are several different varieties of online credit counseling services. Generally, the most effective ones will be those that offer free advice, and only look to credit consolidation loans as a last resort.
- Look for services that offer free quotes as well. Credit card consolidation is for your benefit, not the agency’s. Also, check with the Department of Justice before selecting your agency. They have been tracking credit counselors since 2005 and can help you weed out the malicious profiteers from the good guys. It does not need to resemble a crap-shoot just because you’re on the internet.
- Make sure that there is back-up to the online experience. The internet is here for convenience, but is ripe for human error and malfeasance. Make sure the firm you deal with has an established call center with real people available on the phone, as well as a physical office—not just a post office box. And make sure you get everything in writing.
- Be as forthcoming and thorough as possible with your debt data. You may need to do some extra prep work before dealing with an online credit counselor. Appreciate the convenience being offered by making things as convenient as you can for them.
Get Back in the Credit Card Black
Credit card consolidation is a great option for those who are earnestly striving to get out of debt, and who have no other recourse. Once involved in such a program, it is obviously important to stick to the terms and to make payments on time every time. True, there are no debtor’s prisons, but then again one cannot truly be free if creditors believe that they rightfully own all that person’s assets.
Learn how to overcome the pitfalls of credit cards and put best practices into action to boost your credit score.