Debt consolidation is a strategy to enable the debtor to re-arrange
existing debt into another repayment plan. There are many companies offering this service to the public, some highly reputable, while many others are now out of business due to unethical business practices.
Here’s an overview of other strategies that can be employed independently, and without calls to credit card companies who may or may not be sympathetic to your request to lower rates, and forgive a portion of your debt.
For example, Case and point: A $5,000 credit card debt at 18% interest, calling for a 3% monthly minimum payment of $ 150.00, would take 226 months to pay off and cost you $4,799.06 in interest over the life of the debt. NOTE: The first monthly payment is $150.00 and then the remaining payments drop as the balance declines.
But now look at the dramatic positive results by adding just ($5) to the monthly payment per month. By paying $155.00 the first month and then the lower monthly payments(as noted above) for 44 months, the same debt ends, and the total interest over the loan is far less at $1,885.86.
Debt management companies generally charge monthly fees that far exceed the($5.00)
that was advantageously utilized here.
Another simple strategy is outlined in the book: Fighting Fire With Fire-Charging Your Way Out Of Credit Card Debt, and can be downloaded on (cyberread.com) and serves as another independent strategy to beat debt without taking on loans. This simple plan actually calls for disciplined charges that will enable the user to build a nest-egg of funds, to use to pay off each credit card, in rapid succession.
Traditional banks offer debt consolidation loans as well. However, these loans also call for interest at less than preferential rates and the payment which is due on a certain day of the month, would be a larger payment compared to credit card payments, which are generally not all due on the same day of the month.
Debt consolidation schemes have been extremely popularized due to the change in the Bankruptcy Laws. Before committing to these companies and suffering long lasting blemishes on your credit history, it makes sense to consider independent alternatives such as those noted above.