Quite A Bit Of Credit Card Debt Reduction Options Explained

It is an unfortunate reality that in the United States, many consumers are forced to suffer through high interest rate charge card account debt. However, the silver lining on the otherwise dark cloud these people face is that there are specific programs designed to help these consumers through their financial hardships. With that said, many consumers are reading this article in search of the best credit card debt relief option. Although, I will give my opinion as to the type of Americans that can benefit from each program, it is up to each person ultimately to decide what will be best for their own unique financial situations. With that said, I have done quite a bit of research and feel as though I have uncovered pros and cons that people really need to know about regarding credit card account debt consolidation programs, credit card account debt settlement programs and credit card financial hardship programs.

Starting with Debt Consolidation:

Debt consolidation is the process of rolling multiple high interest rate credit card accounts into one low interest rate loan. Although, I dug deeper to find that, well, this isn’t always how this works. As a matter of fact, I found that most debt consolidation companies act on behalf of the consumer to claim financial hardships. Payments are consolidated and sent to the debt consolidation companies who disperse the payments to the individual charge card companies. Of course, charging a fee to do so. Now that you understand charge card account debt consolidation, here are the pros and cons:

Pros:

*Debt consolidation helps many people get out of credit card account debt faster while paying low interest rates in the process.

*Debt consolidation helps to create a constant budgeted payment instead of multiple fluctuating payments.

*Debt consolidation is a relatively simple process.

Cons:

*Because of credit card account closures due to financial hardship, FICO ratings are negatively affected.

*Debt consolidation companies usually charge fees of upwards of 10% of the total credit card debt. This can get quite expensive.

*It may take years to recover from adverse credit affects.

Now, Debt Settlement:

Debt settlement is the process of negotiating the total balance owed on charge card account accounts. Debt settlement companies are able to do this because they encourage consumers to send them payments to place into a settlement special purpose savings account. These payments are not being sent to the lenders. After enough cash is accumulated to negotiate a settlement, the charge card debt settlement corporation goes to work. Knowing that the lender has not paid a credit card account payment in months or even years, the lender is happy to receive pennies on the dollar to settle the debts.

Pros:

*This is a very fast way to get out of debt if done right.

*People save thousands of dollars in charge card interest fees.

*Consumers save thousands of dollars in credit card account principal balances.

Cons:

*Because of charged off credit card accounts, consumers who choose debt settlement face extreme adverse affects on their FICO ratings.

*Credit card debt settlement companies charge thousands of dollars in the long run through monthly fees.

*Can last on FICO ratings for up to 7 years!

One of my favorite options, credit card account financial hardship programs. These are special programs that are set up directly with the lenders and Americans without the involvement of any third parties. In most cases, charge card account hardship programs reduce interest rates and payments and provide one constant payment for 60 months.

Pros:

*No third parties means that there are no extra fees to pay.

*Accounts show as closed by consumer not closed by lender reducing the adverse credit affect.

*Consumers save thousands of dollars in interest and finance charges.

*People get out of debt in at least 5 years!

Cons:

*Because accounts are closed there is a minor adverse affect on FICO ratings. However, this is not nearly as bad as those by credit card account debt settlement or debt consolidation.

*Americans may be taken out of these programs if they miss payments.

*Credit card account is closed.

This article was written by Joshua Rodriguez and is brought to you by:
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Author: JoshLeeRodriguez

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