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Repay Debt Dues Faster. Low Interest Rates - that is the hype.
The fact is that actually the debt consolidation company gets benefited from this one. They buy - yes buy - a lower interest rate from the company you owe money to by negotiating pay back of thousands of dollars of debt. You are charged a fee for this service and a monthly fee thereafter.
The debt consolidation provider pays off your loan faster, you don't. You keep paying them instead.
If you thought making regular payments by your due date was expensive, try making ONE LOW Payment monthly.
These companies only buy bad debt to lower the interest. They will buy sets of debt - thousands of dollars of debt from a company to get the lower interest rate - and in addition they get a percentage kickback from your financing company to reward themselves for payment of that loan.
Debt consolidation scam fees are built into your monthly payment - So in the real world you pay as much as you could have if you had sent that extra payment to your credit company and paid off your higher interest rate credit card faster by adding that extra fee to your payment every month. Actually, you pay extra.
They don't re-negotiate your due date. That means that they pay everyone's installment at the same time, once a month.
If they repay on the 15th of the month and your payment was due on the first, then your credit will take a 30-day late payment once per month - every month-on all three of your credit reports. Late payments stick on your credit history for 7 years (or more). Feeling good now, I'll bet!
That's not all. You could also be one of those individuals whose payments get skipped once in a while - Yes it occurs all the time with Debt Consolidation techniques.
Negotiation is something you can do by yourself. If you just hate speaking to these people you can even approve someone you know and trust to make a deal for a lower interest rate for you on your behalf. If you can't get anywhere negotiating with the first person you talk to, ask to talk to a manager. If you can't get anywhere by the third supervisor, you're trapped.
- Negotiate your own reduced Interest rate
- Stretch out your repayment schedule
- Pay off the highest interest debts First and add extra money
- Write 2 checks: One for the minimum payment and One for any additional money with a mention in the memo that reads: "Principal Only Payment." This one simple step can save you tons of money. If you don't do this, your money is automatically taken to the interest and you'll pay more interest for a longer period. Yeah, that really sucks, certainly not for them. For you.
- Figure out - there are cost-free debt calculators all over the web - what it would take to pay your highest interest cards first. I plugged in my own and came up with the fact that if I add $60 a month to my minimum credit card bill, I can have a $1300 debt paid in 12 months with $66 interest.
- If I proceed with the minimum payment, It can take more than 6 years and cost me over $2500. Actually that one action on my part put over $1134 back in my account - in one year. And I did it personally. Without debt consolidation costs!
I don't recommend any debt consolidation firm. They prey on your desperation and the doom and gloom of the length of paying back your credit cards at minimum payments..
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