How Do Credit Card Debt Consolidation Companies Work

Each month you make a single payment to the debt consolidation firm and it distributes a.
How do credit card debt consolidation companies work. The loan may be obtained through debt relief companies or through your bank or as a home equity loan if you own a home. As the name suggests you will combine your different credit card balances. When you consolidate debt you take out another lower interest loan such as a home equity loan or a personal loan and pay off all of your credit card balances. Many credit card companies offer zero percent or low interest balance transfers to invite you to consolidate your debt on one credit card.
Let us define what credit card debt consolidation is all about. They don t help you slay mammoth amounts of debt. In fact you end up paying more and staying in debt longer because of so called consolidation. Instead of obtaining a new loan to pay off your credit cards the debt management company tries to negotiate with the credit card companies to reduce your interest rates or otherwise lower your monthly payments.
Essentially you take a sizable loan use those funds to pay off all your creditors and then make monthly payments on the loan. Typically this is how these companies work. The promotional interest rate for most balance transfers lasts for a limited time. Credit card debt consolidation is one way to manage ballooning monthly payments on multiple high interest credit cards.
What you should know. Get the facts before you consolidate your debt or work with a settlement company. What does credit card debt consolidation mean. This is a debt solution that allows you to restructure your multiple debts.
But the truth is debt consolidation loans and debt settlement companies suck even more.