Ronnica Rothe is a graduate with honors from the University of Oklahoma and a current student at Southeastern Baptist Theological Seminary. She works with Personal Financial Network (pfni.net) to help individuals get out of debt and reach their financial goals.
Credit cards offer so many benefits to our society that it is easy to take advantage of them. It is hard to find a business in America that doesn’t accept or even prefer payment by credit card. Everyday credit card solicitations come in the mail and on the TV, and the convenience of online shopping almost entirely depends on credit cards.
Many people find themselves in debt because of or in spite of the benefits of credit cards. Whether collecting credit card debt was preventable or not, the person who finds themselves in that position needs to find a way out. Just as credit card solicitations are everywhere, so are advertisements for companies who want to take care of your credit card debt. It is important to know exactly what the company is offering before you agree to their plan.
One type of service that you might be offered is a debt consolidation loan. Through debt consolidation loans, you can pay off the rest of your debt and only owe to one company. These usually require good credit, however, in order to obtain a helpful interest rate. If the interest on the loan is too high, you might as well be paying the original creditors at their rates.
Another service that might be offered is debt settlement. This is an extreme form of debt help that can be beneficial in the right circumstances. However, this can be damaging to your credit and might not offer worthwhile relief.
A debt management plan is often a good solution because it provides the benefits of a debt consolidation loan without the need for good credit. If you sign on to a debt management plan you will pay one monthly payment to the debt management company who will then disperse your funds to your creditors. They also will negotiate lower interest rates and fees on those accounts on your behalf. This provides a disciplined way to get your credit card debt paid off, usually in three to five years.
Whatever the option you choose, make sure you understand the benefits and the costs to the credit card debt relief you choose. Talking to a certified credit counselor can provide you with the clarity you need to make the right decision.
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