Financial Freedom

It’s easy to let your credit card debt get overwhelming. This doesn’t mean you’re a shopaholic, addicted to the thrill of the hunt and feeling forced into buying items on total impulse, watching packages stack up unopened and unneeded. In a bad economy many families are forced into using credit cards for things they never would have used them for before such as weekly grocery shopping, coffee shop runs, or even paying other bills using a credit card. When bills pile up, consolidated credit counselling might be a good option for you.

Consolidating your credit is just what it sounds like – you consolidate all your bills into one monthly payment. There are pros and cons associated with this consolidated credit counseling process but for many families it’s the only option they have available without filing for bankruptcy.

To begin your research, find local non profit groups that provide this type of service. Before committing to any type of service, make sure you fully understand their intentions and your obligations. Consolidated bills are great, but there are many scam artists out there who prey on victims so desperate they will sign anything and do anything to alleviate their financial stress.

One of the scams involves consolidated credit counseling companies that actually do absolutely nothing for you. These are usually online sites that have very professional looking information, testimonials from supposed clients, and lots of disclosure information about what they do and how this could affect your credit – all things one would expect to see in a legitimate business of this nature.

However, what the consolidated credit counseling companies can do is take your money and run. They simply take your application, perhaps communicate via email or even a few phone calls, wait an appreciate period of time, and then tell you everything has been fixed. They then give you a new figure for what your monthly payment will be, and you are instructed to send them this money.

Of course, the assumption is that the consolidated credit counseling company will, in turn, be paying each of your creditors the amount they have allegedly negotiated for with this agency. In reality, the company hasn’t contacted anyone at all, there is no new lower payment, and your money is doing nothing but fattening the bank account of the scammer who set up the website. By the time you realize there is a problem, which is usually about two months, these consolidated credit counselling people are gone. The website is down and back up under another name, doing the same thing.

You find out what has happened only because your creditors start calling wondering why you haven’t paid your bill! Then you discover they have never been contacted by any consolidated credit counseling company acting on your behalf in order to reduce your payments.

Compounding the problem at this point is that your credit cards most probably have either been closed, or worse – your APR has gone from something fairly reasonable to something close to 25-40%, all of which was outlined to you in your original terms and conditions agreement when you opened your cards to begin with.