Combining Debt - Financial Debt Consolidation Swindles
Pay Off Loans Faster. Low Interest Rates - that is the publicity.
The fact is that only the debt consolidation company benefits from this one. They buy - yes buy - a lower rate of interest from the company you owe money to by negotiating payment of thousands of dollars of debt. You are charged a fee for this facility and a monthly fee thereafter.
The debt consolidation company pays off your loan quicker, you don't. You keep paying them in its place.
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 minimize the interest. They will buy groups of debt - thousands of dollars of debt from a company to get the lower interest rate - as well as they get a percentage kickback from your credit company to reward themselves for payment of that debt.
Debt consolidation scam fees are included in your monthly payment - So literally you pay as much as you would have if you had sent that extra payment to your credit company and paid off your higher interest rate credit card sooner by adding that extra fee to your payment monthly. Actually, you pay extra.
They don't re-negotiate your payment date. That means that they pay everyone's payment at the same time, once a month.
If they pay out on the 15th of the month and your payment was payable on the first, then your credit will take a 30-day late payment once a month - every month-on all three of your credit records. Late payments stay on your credit history for 7 years (or longer). Feeling good now, I'll bet!
That's only a few. You could also be one of those people whose payments get missed once in a while - Yes it occurs all the time with Debt Consolidation procedures.
Negotiation is something you can do on your own. If you just hate talking to these people you can even empower someone you know and trust to negotiate a lower interest rate for you on your behalf. If you can't get anywhere negotiating with the very first person you talk to, ask to talk to a supervisor. If you can't get anywhere by the third supervisor, you're stuck.
- Negotiate your own reduced Interest rate
- Stretch your repayment schedule
- Pay off the highest interest debts First and add extra money
- Write 2 checks: One for the lowest payment and One for any additional money with a note in the memo that says: "Principal Only Payment." This one simple action can save you tons of money. If you don't do this, your money is automatically applied to the interest and you'll pay more interest for an extended period. Yeah, that really sucks, certainly not for them. For you.
- Figure out - there are free debt calculators all over the internet - what it would take to repay 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 off in 12 months with $66 interest.
- If I continue 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 pocket - in one year. And I did it on my own. Without debt consolidation fees!
I don't recommend any debt consolidation company. They prey on your despair and the doom and gloom of the length of repaying your credit cards at minimum payments.
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