If your credit card payments are out of control, and your getting tired of calls from collection agencies, it may be time to consolidate some of your debt. As with any financial move, each situation is different and requires special planning before taking action.
There are several different options available to consolidate your debt. Many are helpful but some can leave you further behind than when you started. A few of these alternatives are listed below.
Credit Card Offers: While your credit cards may be the problem, many companies are very successful at talking you into paying off your existing debt using their card and an incredibly low interest rate. The problem with these offers is that the low interest rates are usually temporary and subject to change.
Bill Paying Service: There are institutions available that will essentially act as a bookkeeper. Don’t be fooled into thinking that they will lower your debt. They simply work to pay your bills on time and charge you a portion of your total bills to do the work. In many instances, these companies cannot work effectively enough and bills are paid late or neglected.
Finance Companies: These companies will offer a loan to pay off all of your debt. The benefit to this type of relationship is that you will be accountable to one institution. However, the interest rates charged by a finance company are often very high. To make matters worse, many creditors consider finance companies a last resort for someone in financial distress giving you a negative credit report.
Rather than resort to loans and paying others to pay your bills, look to credit counseling services. In many cases these services are provided free of charge. It should be your first step before taking drastic measures with your already damaged finances.