Consolidating Debt - Loan Consolidation Ripoffs

Pay Off Debt Faster. Low Interest Rates - that is the hype.

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

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

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

These companies only buy bad debt to reduce the interest. They will buy sets 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 built into your monthly payment - So in the real world you pay as much as you could have if you had sent that extra payment to your financing company and paid off your higher interest rate credit card quicker by adding that additional 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 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 per month - every month-on all three of your credit information. Late payments remain 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 happens all the time with Debt Consolidation practices.

Negotiation is something you can do yourself. If you just hate speaking to these people you can even approve someone you know and trust to reconcile 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 lower Interest rate

- Stretch out your repayment schedule

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

- Write 2 checks: One for the least payment and One for any additional money with a mention 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 a longer period. Yeah, that really sucks, but not for them. For you.

- Figure out - there are freely available debt calculators all over the net - what it would take to pay 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 longer than 6 years and cost me over $2500. Just that one action that I took put over $1134 back in my account - in one year. And I did it personally. Without debt consolidation charges!

I don't recommend any debt consolidation company. 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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