We are thinking about money differently than we used to. Free Credit card debt consolidation and dealing strictly in cash are two of the new the most common changes that people are making. If the truth be told, paying off your debt on your own is the completely free method of debt management.
A debt consolidation loan will require you to pay closing costs, but you may be able to have them added to your loan. Paying off debt with debt has gotten many people in trouble. Just about all debt consolidation loans will require your home be used as collareral. Foreclosure proceedings can be started, if you default on this loan. If you look at the recent economy, taking out a home equity loan a few years ago may have put you upside down in your home loan. This is a terrible position to be in.
A debt settlement company will charge you based on the amount of money they are able to save you on your credit card balance. The fee usually ranges from 15%-25%. So, if they save you $2,000, you will be paying from $300-$500 for this service with a net savings of $1,500-$1,700. But here is the disadvantage. You will have to pay taxes on that same amount and this transaction will not be reported favorably on your credit.
Credit counseling service is another option you have and for most people that want help managing their debt this alternative is best. In most cases, you will see your interest rates be reduced to 10% or lower. Unless you are paying less than 20%, this offer a substantial savings and will save you several years and thousands of dollars. Just use any debt calculator and you will be astounded at what you will save with and interest rate reduction. The cost of this service normaly varies from $30-$50 a month. A debt consolidation plan allows you the convenience of making only one payment each month.
Although these are not free credit card debt consolidation options, they are going to cost you less than what you are paying now. Some debt relief methods are better than others and not all will work for all situations. It will depend on your personal debt situation which debt relief solution will work best for you.
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