credit card debt consolidation program

Credit card debt consolidation refers to consolidation of the debt on various credit cards into a single credit card (or a couple of credit cards). Generally, you move from a higher APR credit card to a lower APR credit card.  If you look into how the vicious circle of credit card debt works, you will immediately understand the logic behind that.

Credit card debt consolidation program grows in 2 ways:

1. Due to addition of new debt on account of fresh spends on your credit card (your use of credit card).

2. Due to addition of interest charges to the existing credit card debt ( interest charges which are calculated on the basis of the interest rate or the APR applicable to your credit card). So a lower APR rate means that your credit card debt will grow at a slower pace and hence switching over to a card with lower APR makes perfect sense.

The process of consolidation credit card debt referred to as balance transfer process (you transfer the balance or debt from one credit card to another).The credit card debt consolidation (or balance transfer) offers are made even more attractive by the credit card suppliers by associating various benefits with them. The simple logic behind offering these benefits is the fact that such a customer would be defecting from one of their competitors.

The biggest benefit offered by these credit card suppliers is 0% interest on balance transfers (or credit card debt consolidation). This 0% APR is generally applicable for a short period of time i.e. 3-6 months, after which the standard APR is applicable. Other credit card debt consolidation offers include things like interest free purchase for a short period, reward points, etc. These credit card debt consolidation offers make the exercise of credit card debt consolidation even more logical and meaningful.

Credit card debt consolidation seems to be a good way of tackling the problem of credit card debt and that is the reason why there is so much of discussion on the topic of Credit card debt consolidation.

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Another increasing cause of concern is that the debt settlement companies are always locking horns with the attorney generals, the state regulators and the FTC or the Federal Trade Commission. This is because the FTC and attorney generals receive many complaints against debt settlement companies or companies offering other forms of debt help.

Majority of the consumers complain about the fee structure of the debt settlement companies. Consumers complain that the debt relief companies advertise that they will help you to get out of debt, not that they don’t deliver what they promise but there are many such companies that are not able to live up to their promises and charge fees before they deliver the services. This is very troubling especially for debtors that exhaust even their last drop saving to get out of debt.

So, the main reason why debt settlement companies aren’t celebrating is due to the fact that the debt help firms could be “legislated, regulated or litigated out of business”. This has not gone down very well with all the debt settlement companies. However, many are jubilating with this proposal since they feel that there are many companies that operate illegally or extend poor service to the consumers due to which all other debt settlement companies have to suffer the wrath.

The debt settlement companies complaint that the attorney generals, state regulators are not aware of the nature of help offered by these companies. As such they believe what consumers say.

Although there are about 2000 debt settlement companies, the services offered by these companies vary widely. In debt settlement, the outstanding balance of the debt is reduced to a great extent. To select the right debt settlement company, it is best to thoroughly investigate the credentials of these companies and then enroll for the program. The BBB or the Better Business Bureau urges consumers to understand the process of debt settlement so that it can minimize their risk of being fooled.

Contributed by Debt community Member.

Others articles you may want to read: eliminate credit card debt and  consolidate credit card debt.

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