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Debt Consolidation - Scams In Debt Consolidation

Pay Off Loans Faster. Low Interest Rates - that is the buzz.

The fact is that basically the debt consolidation company benefits from this one. They buy - yes buy - a lower interest rate from the company you owe money to by negotiating payment of thousands of dollars of debt. You are charged an amount for this service and a monthly fee thereafter.

The debt consolidation company pays off your loan quicker, you don't. You keep paying them rather.

If you thought making regular paybacks by your due date was expensive, try making ONE LOW Payment monthly.

These companies only buy bad debt to lower the interest. They will buy groups of debt - thousands of dollars of debt from a firm to get the lower interest rate - plus they get a percentage kickback from your credit company to reward themselves for payment of that debt.

Debt consolidation scam fees are built into your monthly payment - So practically you pay as much as you could have if you had sent that extra payment to your credit company and paid off your higher interest rate credit card faster by adding that extra fee to your payment every month. Actually, you pay more.

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 due on the first, then your credit will carry a 30-day late payment once a month - every month-on all three of your credit reports. Late payments stay on your credit history for 7 years (or more). Feeling good now, I'll bet!

That's not all. 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 techniques.

Negotiation is something you can do yourself. If you just hate talking to these people you can even authorize someone you know and trust to negotiate a lower interest rate for you on your advantage. If you can't get anywhere negotiating with the 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 lower Interest rate

- Extend your repayment schedule

- Pay off the largest interest debts First and add extra money

- Write 2 checks: One for the minimum payment and One for any additional money with a note in the memo that states: "Principal Only Payment." This one simple step 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 a longer period. Yeah, that really sucks, definitely not for them. For you.

- Figure out - there are freely available debt calculators all over the internet - what it would take to pay off your highest interest cards first. I plugged in my own and got up to the fact that if I add $60 a month to my minimum credit card payment, I can have a $1300 debt paid off in 12 months with $66 interest.

- If I continue with the minimum payment, It can take longer than 6 years and cost me over $2500. Simply that one action that I took put over $1134 back in my pocket - in one year. And I did it myself. Without debt consolidation fees!

I don't recommend any debt consolidation firm. They prey on your desperation and the doom and gloom of the length of repaying your credit cards at minimum payments.

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