Consumers Beware of Credit Counseling Debt Consolidation Agency

With the onset of a double minimum payment on credit cards, many people may be feeling the squeeze to make the payments. Instead of not paying your credit card bills, take the time to consolidate your debt to a more manageable lump sum with lower interest rates. Some people may consider the credit counseling debt consolidation services for the answer. This might not be the best solution.

The credit counseling services claim to be a “non-profit” company that consolidates your debt into one lump sum. You then pay them a monthly payment and the intern sends the payments to all the creditors. They do work on your behalf to get a lower interest rate for you and it can offer a bit of relief to have them make all the payments. The reality is that these agencies get a cut of the money which can add anywhere to $250 to $5,000 depending on the agency just for fee processing. They also get a percentage of the money that you pay back to the credit card companies. So they are getting their cut too.

The credit agencies do not work with people that have secured debts like home and car loans. There is also a risk that some of these agency are running a scam and are not paying off your debt at all. The reality is that the “non-profit” in these agencies does not come free of charge. They have to afford to pay for the advertisement on TV.

With a little homework and a little organization, it is possible for a person to accomplish the same efforts on their own. You will know that the creditors are actually being paid and not have another surprise if they have not; you are not paying out the $250 - $5,000 in fees to an agency which could be used to pay off your debt. It might be time to schedule an appointment with yourself at least once a week to look at the bills and have a plan of action regarding this matter. If it is more critical take the time to take care of the plan immediately take the whole weekend to work out a plan and follow up every week with yourself to see what else needs to be done or improved.

The agencies also make you cancel all of your credit cards in the process. If you can put the cards away and not use them this may be better for your situation. If you need to quit cold turkey because the cards have become a big part of your lifestyle, canceling the cards may be a better solution. A statistic to mull over on the credit repair agencies, around 50% of the people that apply and go through the process drop out only after 3 months with the program. The sad part is that these people have a mark on their credit report now regarding the counseling agency and it will hurt their credit score even more.

It would be better to try to get your balances put together in an unsecured loan at the lowest interest rate that you can. Most credit cards charge 19.99% interest. However if you shop around for an unsecured personal loan you might get a lower rate with the same one payment plan. Eloan offers these kinds of loans up to $25,000. The interest rates will vary depending on your credit score when you apply. By consolidating your debt into one loan you will know that your payments are being made and you will not wonder if the agency is doing their part.

If you own a home it might be easier for you to get home loan to cover all the credit card debts. This will not only lower the interest rates, it will also give a primary residence tax deduction for the interest paid on the loan.

A financial counselor may be worthwhile expense. Your local community college might have a class on budgeting. You can purchase many books on how to consolidate debt. By researching the problem you will become educated on how to manage your expenses better. Even when you think you can’t save money if you have a limited income, there usually is some area that you can save a little hear and there.

What are people saying about mortgages today:

Rates on 30-year mortgages edged down last week to a seven-month low. Mortgage-giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages fell to 6.3 percent, down slightly from 6.31 percent two weeks ago. It put rates at the lowest level since they were at 6.24 percent the first week of March.

Bank of Hawaii, Central Pacific Bank, Territorial Savings Bank and Wells Fargo Home Mortgages all cut their 30-year mortgage rates to 5.75 percent this week.

Most people think of a mortgage as a means to an end. After all, you buy a house, not a home loan. But a mortgage is much more than the path to homeownership. It is a financial instrument that must be managed, just like any other financial investment.