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Credit Card Debt Solutions – A Legitimate Guide To Eliminate Unsecured Debts
By creditdebtonline.com
Dated: Jun 16, 2010
With Consumer Debt at a National high, many Americans are faced with increasing credit card interest
rates, minimum monthly payments, etc.
With Consumer Debt at a National high, many Americans are faced with increasing credit card interest
rates, minimum monthly payments, etc. It is becoming harder and harder to meet our monthly obligations
each month and many consumers are looking for answers.
This article will give you a brief run-down of the options that are available today to help make the decision
a little easier.
The first option is to keep doing what you are doing now. Make your monthly minimum payments, pay
increasingly high COMPOUND interest and lose thousands of dollars over the course of several years
doing so. According to Bankrate.com, the average household has approx. $30K in unsecured debt. Did you
know that paying the minimum monthly payments will cost you $112K in interest and it will take you
approx. 59 years, yes you heard correctly, YEARS to pay off? That is a definite financial choice that will
put you in the poor house quicker than anything else. When you are paying interest like this, it does not
even benefit you to save your money in a savings account, because the interest would not gain fast enough
to offset the interest you are paying on your credit cards. So, what should you do? Consider the other
options!
The next option is a Debt consolidation. This is a generic term now being used but true debt consolidation
is taking your current debt load and rolling it into a new loan, with interest over a longer period of time.
You will either need some security like a home or bank account. You will pay interest that is
non-compounded, which is definitely better than compound interest; however, you will spread your debt
over a longer period of time and therefore shell out more cash than necessary. If you have a small debt load,
under $10,000, This may be a good option for you if you dedicate yourself to making larger monthly
payments than are required, paying off early if possible.
Another option is Consumer Credit Counseling . You will recognize these companies because they usually
have a non-profit status. They are actually sponsored by the credit card companies themselves and they
have what is called a fair share arrangement, meaning the credit card companies pay these companies to
keep you paying them. Your money is not dispersed into an escrow account, but the cccs companies
disperse it evenly amongst your creditors how they see fit. You will not experience any relief from your
monthly payment since they will stay pretty much the same. Interest rates are lowered most often, but are
not completely eliminated. I have heard many complaints that payments are skipped and facts show that
most enrollees in this type of program quit after the first 12-24 months. The reason being is that your credit
report is negatively affected closely to that of a bankruptcy. When lenders and loan companies see an
account managed by CCCS, they view it the SAME as a BANKRUPTCY. These types of programs usually
take about 5-7 years to complete. Once the program is completed, the creditors release comments about
CCCS on your credit report. To Sum it up, you have no monthly savings relief, you still pay your entire
debt plus interest and your credit is negatively impacted for 5-7 years.
The last option I will outline is Debt Settlement. This type of program is becoming increasingly popular
because of its many benefits to consumers. Debt Settlement Companies are experts at negotiating your debt
down, on average for all cards/accounts, to 40% to 70% of what you owe. One card may settle at 80%, even
100% in some cases, the next card could be 30%. The end result is an overall total average of 40% to 70%
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of all the cards. This will be based on who your creditors are and their criteria. Creditors are directed to
speak only to Certified Debt Mediators once enrolled and the process begins. Enrollees are set up on
monthly payment plans, usually at a savings of 50% out of pocket providing immediate cash flow. You will
be set up with one monthly savings amount, which will be deposited into a secured trust account at a Bank.
Savings amounts are YOUR money. Settlement Companies have no access to it, beyond their fees, and
neither do the creditors. It is a secure, protected trust account. This is the money, as it accumulates, that will
be used to settle your debts. The consumer will have control of their own funds throughout the whole
process. The average time a consumer is in the program is 12-36 months. During this time, the creditors
will be reporting late pays on the consumer's credit report while this process is going on. As settlements are
reached with each creditor, the creditors will report it settled in full, paid with a zero balance.So, ultimately,
at the end of the program, then your debt to income ratio will have improved and your credit will begin to
heal itself for the future. In addition, you will not have the long term effect of a public record as you would
with a bankruptcy.
Debt Settlement Companies do charge fees for their service, because creditors are not in alliance with
DSC's and do not give them kick backs for payments like in Consumer Credit Counseling. The fees average
15%-18% depending on which company you choose and the quality of service they provide. Most
established firms will offer an online back office in which you can track your payments and settlement
activities. Often times, fees are looked at in a negative light. But if you actually do the math, the savings
still add up to substantial amounts and your credit gets back in shape pretty quickly. For instance, for $30K
in debt and fees at 15% or $4500.00, you will still have an average savings of approx. $10,500. That is
nothing to sneeze at! If your credit is a concern, then you must weigh your priorities.
Becoming debt free will give you many more advantages in your long term financial path, then two years
with some late marks on your credit report. You may even consider credit repair after you are out of this
type of program.
Free Debt Advice
(http://www.creditdebtonline.com)
###
If you are struggling with paying back your credit card debt or any other unsecured debts there is legitimate
help out there. Debt settlement usually makes financial sense for consumers with over $10k in unsecured
debt. There are also other options available. To talk with a debt relief counselor for free help check out the
following link:
Free Debt Advice
(http://www.creditdebtonline.com)
Or Call - 877-853-6466
Category Finance
Tags credit card debt consolidation, credit card, credit card debt, credit cards
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Phone 877-853-6466
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