2010

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Cut Better Deals With Credit Card Debt Consolidation  

 

Troubled credit card borrowers should take immediate steps to solve their financial problems. The first thing that they should consider is to reduce their everyday expenses and focus more on repaying their debts. Reducing the need to swipe and using cash to buy their day to day necessities might be good ideas as well. Other than cutting down on the expenditures, cardholders should also consider finding a new job, especially if they don’t earn much from their present full time endeavor.

 

 

Additional sources of incomes such as online or home businesses may also be of help. However, if these simple lifestyle changes are not effective in addressing their financial problems, then drastic moves must be made – this includes getting in a credit card debt consolidation program.

 

Credit Card Debt Consolidation - Having Second Thoughts

 

Some debtors who are obviously mired in credit card problems are rethinking their decision to get into a credit card debt consolidation program. One of the reasons is the fact that they think most of the credit counseling and debt consolidation companies are fly-by-night organizations.

 

True to their suspicions, statistics show that hundreds of thousands of debtors really fall victim to many fraudulent consolidation companies these days. But then, there are some ways to avoid being scammed. The most important of which is to check the company’s affiliations with the Better Business Bureau and other commercial financing institutions.

 

Another idea is that many of the credit counseling companies provide services that they can perform on their own. This includes checking their credit rating through credit report requests from the major credit bureaus and negotiating with the credit card companies. Contrary to their misconceptions however, most of the debtors who negotiate on their own usually do not end up with good deals.

 

Stringent Rules and Increased Bankruptcy Filings

 

Many debtors who decide to negotiate on their own usually end up with meager deals. So, instead of repaying their debts, they file for bankruptcy. According to financial planners, many banks and financial institutions are no longer willing to make deals with their risky clients - particularly those who aren’t working with credit card debt consolidation companies.

 

For example, credit companies which were once willing to offer zero percent interest rates to clients that seek their help are now sticking with more stringent rules. In particular, Discover Financial Services (DFS) pointed that they won't cut rates below 17.9% for clients and Capital One Financial (COF) firmly states that they will stick with their 15.9%. According to reports made by the Consumer Federation of America, five of the thirteen biggest credit card issuers are “offering smaller breaks on rates than they did five years ago.”

 

Analysts noted that credit card companies are being strict with their repayment regulations simply because they are worried with the increasing number of delinquent cardholders and their losses. Ronald Mann, a professor at Columbia Law School thinks otherwise: “Higher rates maximize the recovery.” He notes that that finance institutions determined that many individuals will still pay for their debts regardless of whether you lower their rates or not.

 

Better Deals with Consolidators

 

Through the help of experts in a credit card debt consolidation program, banks and finance institutions will be more willing to offer lower interest rates simply because being in counseling and consolidation programs guarantees a debtor’s commitment to a debt repayment plan.  

 

Some credit card companies have expressed their willingness to offer better deals. "We have a range of rates that we temporarily offer card members depending on their situation," notes Matthew Towson, spokesperson of DFS. JP Morgan Chase (JPM) also announced that they are willing to cut rates to 0% for consumers who have a formal debt-management plan. Bank of America also declared that they can drop the interest rates to a low single-digit level.

 

 

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