Those debt consolidation companies....

[iamme]

Has anyone used any of those debt consolidation companies that I keep seeing advertised? Like Profina? Not those fly-by-night looking spam email you get, but the ones that have been advertising for a while. They claim to consolidate all of your credit cards and lower your interest rates by a bunch.

Anyone have any experience?

 

[Pliablemoose]

They all cost you more money than if you were to methodically pay off your high interest notes first, and not generate new debt.

If a consumer is out of control & needs some external structure, they're helpful, but the best thing is to cut up & cancel your credit cards, get a debit card or visa check card, and start paying off your debits...

 

[ttn1]

The non-profit government accredited ones are usually pretty good. Basically they call all the credit card companies and say that they need to lower the interest rate to get their money. Note: If you cancel the cards yourself and call the credit card companies and say if they don't lower the interest, you are going to have to declare bankruptcy, they will usually lower the rate.

These companies are just a buffer to gaurantee that the credit companies get their payments on time. If you have no personal will power, these consolidation companies are a good option.

ttn1

 

[EagleKeeper]

The debt consolidation companies are just loaning you the money to pay off your existing debts. The payments will be less, must the loan period will be larger.

Example.
You owe $5000 with min payments of $250/month.
With interest, it may take 24 months to pay off. Total $6000

They lend you $5000 and set you up with payments of $200/month.
With interest, it will take 36 months. Total $7200.

You save $50 month at a cost of $1200 over the time period.

Some also may only take people who have a house to back up the loan.